Benefiting from a bullish stock market this year, pension funds recorded a robust average annual return of 16.94 percent, according to the latest PFRDA data.
That 16.94% average annual return on stocks — as of Dec. 8 of this year — is more than double the roughly 7% return seen in corporate bonds; 7.10 percent in state securities and around 8.2 percent in central and state government schemes, the data showed.
Over the past three years, the seven pension funds have generated an average return of 18.27 percent in terms of money invested in stocks. The average stock return since the inception of the NPS stood at 13.01 percent.
Meanwhile, the overall assets of the National Pension System (NPS), including Atal Pension Yojana, crossed a new milestone of ₹10.5 lakh crore, reaching a level of ₹10.7 lakh crore as on December 9, in increase of 25.95 percent year-on-year. -year. Of the total NPS assets under management of ₹10.7 lakh crore, the total NPS funds parked in equities stood at around ₹1.9 lakh crore.
On December 9 last year, NPS assets stood at ₹8.5 lakh crore.
PFRDA Chairman Deepak Mohanty has already expressed confidence that NPS assets would reach ₹11-12 lakh crore by the end of March 2024.
Indian stock markets have been on a roll in 2023 – particularly in the last two months – thanks to strong domestic inflows of retail investors and also the massive return of foreign portfolio investors (FPIs) to the markets in as net buyers.
So far, in the first two weeks of December this year, FPIs have pumped in ₹43,000 crore into Indian stocks, encouraged by the BJP’s victory in three important states of Rajasthan, Madhya Pradesh and Chhattisgarh in the recent legislative elections. Net equity inflows from FPIs this calendar year stood at a whopping ₹1.5-lakh crore.
Positive outlook
Most analysts on the Street have a good outlook for stocks in 2024, with many saying the ongoing uptrend still has a way to go given the robust macroeconomic situation and expectations of likely continuation of the current regime during the next general elections in 2024.
A Jefferies note on Asia Outlook 2024 recently highlighted that despite any significant external shock, current market multiples in India (Nifty at 18.8x 1 year forward) can be sustained given strong domestic flow. “We expect Nifty to reach new all-time highs in 2024,” said Mahesh Nandurkar, equity analyst, and Abhinav Sinha, equity analyst at Jefferies in their Outlook 2024: India Strategy note.
India’s economic outlook is strong, with multi-year GDP growth of 7% likely, while the broader investment cycle is in its early stages. The positioning of foreign investors is light and therefore corrections will probably be accepted, he adds.
NUMBER OF NPS SUBSCRIBERS
The strong growth in NPS assets this fiscal year was aided by the strong performance of the “Corporate” and “All Citizen Model” categories, which grew by 35.55 percent and 34.49 percent, respectively.
At least 4.54 lakh new subscribers signed up for NPS in these two categories in total this fiscal. Out of these 4.54 lakh new subscribers, as many as 3.60 lakh subscribers came through ‘All Citizen Model’.
The total number of NPS and APY subscribers as of December 9 stood at 6.92 crore, up 16 percent from 5.97 crore last year.
PFRDA, this financial year, expects at least 13 lakh new subscribers from businesses and all categories of citizens. In the previous financial year, PFRDA added one million new subscribers.
The NPS took six years and six months to reach the milestone of ₹1-lakh crore AUM after its implementation in 2009. It then took 4 years and 11 months to further increase the AUM to ₹5-lakh crore.
NPS AUM had doubled to ₹10 lakh crore by August 2023 in a period of just 2 years and ten months.
