Stock market investments too sector-concentrated: Finance JS Alok Tiwari
Alok Tiwari of the Department of Economic Affairs has urged investors to diversify their portfolios across more sectors and geographies. He argued that current market concentration is driven by an unrealistic assessment of risks.
Why it matters
This highlights a structural challenge in the Indian economy where capital is not reaching underinvested regions due to perceived rather than actual risk.
Capital market investments in India need greater diversification across sectors and geographies, for which investors need to take a more “realistic” approach to assessing and managing risks, according to Alok Tiwari, Joint Secretary, Department of Economic Affairs.
Addressing the FICCI Capital Market event in Mumbai, Tiwari said investment was currently concentrated in a limited number of sectors and regions, leaving several parts of the country starved of capital despite offering potentially attractive returns.
“I have a suspicion that too much of investment is concentrated in too few sectors and too few geographies of India,” he said, adding that several sectors and regions could deliver good returns if investors were willing to “realistically assess the risks involved.”
Calling for a shift in both policy and investor behaviour towards risk assessment, he said risks should be confronted and accurately evaluated rather than ignored or “wished away.”
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