Even though the high valuations make many large investors in the Indian markets wary, there seems to be no stopping small investors. Investments made through systematic investment plans (SIPs) increased in December ₹17,610 crore from ₹17,073 crore in November. The total assets under management of the Indian mutual fund industry also crossed ₹50 trillion – the last ₹10 trillion of them were added in just over a year, compared to almost half a century since the first year ₹10 trillion needed.
Even though the high valuations make many large investors in the Indian markets wary, there seems to be no stopping small investors. In December, investments made through systematic investment plans (SIPs) increased ₹17,610 crore from ₹17,073 crore in November. The total assets under management of the Indian mutual fund industry also crossed ₹50 trillion – the last ₹10 trillion of them were added in just over a year, compared to almost half a century since the first year ₹10 trillion needed.
Increasing investor participation is deepening Indian financial markets and providing a buffer against volatile foreign inflows. However, their real test will come when markets fall sharply. The reaction of private investors in such a case would show how stable these flows are. For a long time they were not really tested and the stock indices were on a one-sided slope.
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Increasing investor participation is deepening Indian financial markets and providing a buffer against volatile foreign inflows. However, their real test will come when markets fall sharply. The reaction of private investors in such a case would show how stable these flows are. For a long time they were not really tested and the stock indices were on a one-sided slope.
Since our economic fundamentals are strong, the overall uptrend could remain intact, although stretched valuations could lead to profit-taking in pockets. The flows in the first week of January show that foreign investors are rushing to buy Indian stocks. This could be part of an expected rally ahead of the budget or election, which could mean high levels of speculation.
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