Pay attention to these five stocks for potential high returns, according to a major brokerage firm’s target recommendations.

India’s Capital Market: A Golden Era of Growth

New Delhi: India is currently experiencing a golden era in its capital market, marked by new investment opportunities and growth for asset management companies (AMCs), brokers, wealth managers, and other financial institutions. According to a major brokerage firm, digital technologies like e-KYC, UPI, and account aggregation have made the investment process more transparent and secure. This transformation is set to bring substantial profits to AMCs, brokers, and wealth management companies in the coming years.

Promising Future Trends

A report by Motilal Oswal Financial Services highlights that India’s demographic dividend will surge over the next decade. Approximately 100 million people will enter the workforce, and an equal number of families will rise to the middle-income class. The number of high net worth individuals (HNIs) and ultra-high net worth individuals (UHNIs) is projected to grow at an annual rate of 12%. The capital market ecosystem, including AMCs, brokers, exchanges, and wealth managers, is expected to see an annual growth rate of 17-45% from FY24 to FY27. Additionally, due to their fixed cost nature, significant profit growth (12-75% CAGR) is anticipated.

Challenges and Opportunities

Despite rapid growth, the Indian capital market still trails the global average in several areas. The number of demat accounts in India stands at only 12%, compared to 62% in the USA. The AUM-to-GDP ratio of mutual funds in India is 17%, far below the global average of 65%. However, companies engaged in this sector have substantial profit potential. Motilal Oswal has identified stocks from certain companies with promising target prices.