In India it's the opposite: sell gold, buy stocks

By Biman Mukherji

NEW DELHI (Reuters) - As global investors dump stocks in a flight to safety that has whipped gold prices to a series of record highs, Indians are doing just the opposite.

In a nation that buys a third of the world's gold output, even bullion dealers are selling the stuff in hopes of a seventh year of stock market gains, a trend that could cause gold's record run to above $900 an ounce this year to stumble.

Far removed from gloomy global peers who are bracing for a U.S. recession, Indians increasingly see limited upside for gold after last year's rise of more than 30 percent, and are ready to shift more of their savings from jewellery toward a stock market that notched up over 40 percent gains for three years running.

"I, myself, have sold gold and invested in the equity market," Pawan Choksi, a bullion dealer based in Ahmedabad, told Reuters. "I am restructuring my portfolio."

"Who will take a chance with gold at these levels?" he said. "Maybe there will be a correction."

Earlier this decade, most Indians preferred gold to a share market that they viewed as dominated by speculators and saddled with companies that had dubious earnings potential.

The shift, though slow, is already taking its toll on gold.

Imports by India fell as much as a fifth last year and are likely to tumble again this year if prices stay high, says Suresh Hundia, president of the Bombay Bullion Association.