The First Global founder issues a sharp reality check on NDTV Profit, calling out systematic investment plans as “easy exit ramps” for institutional promotores and global funds.
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The baseline financial formula pitched to India’s exploding retail class has faced a severe challenge from one of Dalal Street’s most experienced minds. Speaking on an exclusive broadcast with NDTV Profit, founder of First Global and veteran investor Shankar Sharma radically upended the consensus surrounding public wealth creation, warning savers that standard comparisons of stock market vs fixed deposit returns are fundamentally incomplete once real-world volatility and tax liabilities are deducted.
Sharma’s warning arrive at an unprecedented moment for the domestic economy. Driven by a massive structural shift away from real estate and physical gold, India’s retail investing class has pushed monthly Systematic Investment Plan (SIP) configurations to record-breaking heights.
However, Sharma argues that the mainstream financial sector routinely highlights raw, pre-tax equity yields while hiding the underlying structural risk burdens born exclusively by everyday savers. “Equity markets are meant for big boys and professionals,” Sharma noted bluntly during his televised appearance. “They are not meant for Mr. Joe on the street.”
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Deconstructing the Risk-Adjusted Inversion Matrix
The core of Sharma’s macroeconomic argument rests on the mathematical failure of headline equity numbers when placed face-to-face with sovereign-backed fixed contracts.
While mutual fund distributors frequently highlight historical equity compound yields floating between 10% and 12% against traditional bank fixed deposit rates of 6% to 8%, they rarely display these figures on a risk-adjusted spreadsheet.
When an investor buys a corporate equity share or an equity-linked mutual fund, they take on an asset with an inherent portfolio volatility scale ranging from 15% to 20%. To justify taking on that extra uncertainty over a guaranteed bank asset, the final net yield must provide a massive safety premium.
Once capital gains taxes are deducted from equity returns, the remaining yield difference over a safe fixed deposit often fails to compensate the investor for the risk of losing their principal capital. Sharma summarizes this dynamic as the absolute difference between seeking a “return on capital” versus protecting the physical “return of capital.”
Evaluating the Structural Yield Disconnection
To understand exactly how the math shifts when matching traditional bank instruments against volatile secondary equity markets, review the baseline operational characteristics tracked across the current wealth landscape:
| Investment Asset Classification | Headline Nominal Yield Profile | Underlying Capital Risk Framework | Real-World Fiscal & Tax Status | Primary Strategic Portfolio Function |
| Sovereign Fixed Deposits | 6.0% – 8.0% Pre‑Tax Fixed | Zero Capital Risk: Principal protected up to statutory ceilings. | Taxed linearly according to an individual’s income tax slab. | Delivers structural predictability and emergency household liquidity. |
| Broad-Market Equities | 10.0% – 12.0% Variable | High Risk: Absolute exposure to market down-cycles and corrections. | Subject to standard Short‑Term and Long‑Term Capital Gains taxes. | Designed for long-term corporate growth capturing over decades. |
| Systematic Plans (SIPs) | Blended market cost average | Continuous capital downside exposure across corrections. | Tax tracking triggered progressively at each individual block exit. | Forces retail discipline while providing liquidity to the market. |
Note: Historical asset models prove that equities remain a stellar generator of long-term wealth because underlying corporate profits expand over time. However, as the Reserve Bank of India keeps interest rates steady amid global energy shocks, short-term equity index performance faces severe tracking headwinds relative to fixed yields.
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The SIP Controversy: Financial Tool or Institutional Exit Ramp?
The most controversial element of Sharma’s analytical breakdown was his sharp assessment of Systematic Investment Plans (SIPs). Long praised by financial planners as the ultimate tool for retail wealth creation via rupee-cost averaging, Sharma flipped the script, characterizing the automated monthly inflows as a structural buffer that benefits institutional elites far more than retail savers.
Sharma explained that the predictable, multi-thousand-crore block of un-hedged retail capital entering the market every 30 days provides continuous buy-side liquidity to the exchanges.
This steady stream of retail money allows corporate promoters, late-stage venture capital funds, private equity syndicates, and Foreign Institutional Investors (FIIs) to execute massive block sales and exit high-multiple stock smoothly without collapsing the underlying share price.
Sharma described this dynamic sharply, stating that SIPs function beautifully for big players “by giving them knife through butter exits.
Ultimately, Sharma’s intervention is not an argument that everyday savers should completely abandon public equities. Rather, it serves as a warning against the industry narrative that stock markets are a guaranteed, risk-free highway to automated wealth.
For ordinary savers looking to survive a highly volatile macro environment, the optimal path requires a realistic balance. High-yield, sovereign-backed fixed deposits can anchor a family’s financial base, while carefully selected, bottom-up small-cap or equity positions provide targeted upside potential.
Headline returns should never be evaluated in a vacuum; the emotional toll of market volatility and the real-world impact of capital taxes matter just as much when mapping out true long-term security.
FAQ Section
What is Shankar Sharma’s primary argument regarding stock market vs fixed deposit returns?
Shankar Sharma argues that mainstream comparisons between equities (10–12% returns) and fixed deposits (6–8% returns) are deeply flawed. He emphasizes that once investors account for capital gains taxes, a high portfolio volatility of 15–20%, and the lack of a principal capital guarantee, the risk-adjusted returns of equities often trail traditional fixed deposits for ordinary retail savers.
Why did Shankar Sharma describe SIPs as institutional “exit ramps”?
Sharma explained that the massive, automated monthly inflows generated by millions of retail SIPs provide continuous buy-side liquidity to the stock exchanges. This steady pool of un-hedged money allows large corporate promoters, venture capital funds, and Foreign Institutional Investors (FIIs) to liquidate their massive holdings easily and exit high-multiple stocks cleanly without tanking the market.
How should an ordinary retail investor balance their portfolio based on this advice?
Financial experts generally recommend avoiding an all-or-nothing approach to the equities versus fixed income debate. Instead, individual savers should utilize guaranteed fixed deposits to secure their core principal capital and emergency liquidity needs, while deploying disciplined, selective equity allocations to capture long-term, inflation-beating corporate growth over extended horizons.
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