How to follow the smart money

According to the Sebi annual report, as of March 2024, about 1,61,571 wealthy clients invested over Rs 33 lakh crore in equity and debt markets. About 80% of that money is in listed debt instruments if you dive deeper into finding the data. That means the rich people focus on preserving their capital more than taking risks. The data on where the smart money goes is not mentioned in Sebi’s annual report. You must go through the monthly industry data published by Sebi on the website. They have increased their allocation to equities over the past few years as a percentage of total investment.

However, debt instruments remain a dominant avenue for storing wealth.

Another group has also cut their ownership in the equity markets. Those are promoters of listed companies. The aggregate data shows a decline in the promoters’ stake in listed companies. That shows business owners believe that their companies’ valuation is on top, and it is an excellent time to cash out. There is usually a very marginal change in the promoter ownership. However, as share prices rallied over the past three years, promoter ownership in listed companies on the National Stock Exchange fell to 41% now from 44% three years ago.

The money promoters raise is a sizeable amount for personal use and finds its way into real estate or fixed-income instruments. Too many investor-owned luxury apartments in Mumbai exemplify how the rich deploy their money. There is not much consistent information about property ownership by investors in the real estate sector.