India’s Investing Shift Deepens As Behaviour, Not Markets, Takes Centre Stage

In a recent episode of SimpleHai!, Pratik Oswal, Head of Passive Business, Motilal Oswal AMC, in conversation with Vivek Law, unpacked the forces shaping India’s evolving investing culture — from inflation and discipline to the rise of passive strategies and tech-led disruption.

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Inflation: The Silent Destroyer of Wealth

At the heart of the conversation was a stark reality: inflation remains the biggest enemy of the Indian investor. Oswal pointed out that while investors often focus on returns, they tend to underestimate the erosive power of inflation — particularly in urban centres like Mumbai and Delhi, where the real cost of living can outpace headline inflation numbers. This creates a dangerous illusion of wealth creation, where nominal gains mask stagnant or even declining real returns.

The discussion went a step further, linking inflation to investor behaviour. The inability to stay invested, the tendency to chase short-term gains, and the lack of disciplined allocation often amplify the impact of inflation. According to Oswal, investors who can control their behaviour — staying consistent and resisting noise — are far more likely to achieve meaningful long-term outcomes. In that sense, managing behaviour becomes just as critical as selecting the right financial product.

An Industry Obsessed With Products?

In a rare moment of candour, Oswal acknowledged that the mutual fund industry may be overly focused on product proliferation. As asset management companies compete for investor attention, the market has seen a steady stream of new fund launches, thematic offerings, and differentiated strategies. While innovation is essential, Oswal suggested that this product-heavy approach can sometimes overwhelm investors rather than empower them.

The core issue, he implied, is a misalignment of priorities. Instead of simplifying decision-making, the abundance of choices can lead to confusion, misallocation, or frequent switching — all of which ultimately hurt investor returns. If investors were simply able to stick to a disciplined approach and manage their own behavioural biases, many would “do extremely well” without constantly seeking new products. This critique ties into a broader industry challenge: shifting the narrative from selling products to enabling outcomes.

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Passive vs Active: Finding the Right Balance

The debate between active and passive investing formed a central pillar of the discussion. Oswal explained that passive funds — including ETFs and index funds — are particularly well-suited for investors seeking low-cost, transparent exposure to the broader market. They remove the uncertainty of fund manager performance and offer a straightforward way to participate in market growth.

However, he was careful to avoid framing this as a binary choice. Passive strategies, he noted, are ideal for a significant portion of an investor’s portfolio, but there remains room for active management in areas where alpha generation is still possible. The key lies in understanding where each approach fits, rather than viewing them as competing philosophies. This balanced perspective reflects a maturing market, where investors are gradually moving toward more nuanced portfolio construction rather than relying on one-size-fits-all solutions.

Tech-Led Investing: The Next Frontier

Looking ahead, technology is set to redefine how Indians invest. Oswal highlighted the emergence of “Tech X Investing,” where digital platforms, data analytics, and seamless user experiences are making investing more accessible than ever before. The rapid evolution seen in sectors like telecom over the past decade, he suggested, offers a glimpse into how financial services could transform — becoming more efficient, scalable, and user-centric.

This shift is not just about convenience; it has the potential to fundamentally alter investor behaviour. With better tools, real-time insights, and simplified interfaces, investors may be better equipped to stay disciplined and make informed decisions. At the same time, the asset management industry will need to ensure that technological innovation does not add another layer of complexity. The challenge will be to use technology as a means of simplification — not distraction.

Overall, the conversation underscored a critical point: India’s wealth creation story is no longer just about market access — it is about behaviour, discipline, and the intelligent use of tools. As the ecosystem matures, the winners will not just be those who invest, but those who invest right.

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