Retail investors are helping extend an almost two-year stockmarket rally just as India's $100 billion social security andpension fund too begins to invest in equities for the firsttime. "Retail investors are finally coming back to the market,after almost five years of muted participation," said SundeepSikka, chief executive officer of Reliance Capital AssetManagement.
Investment in Indian equity mutualfunds by domestic retail investors has hit the highest since2008, signalling the return of individual players drawn to astock market that is outperforming physical assets such as goldand real estate.
Domestic net inflows into equity mutual funds in June werethe second-highest ever - second only to January 2008 before thefinancial crisis took hold, according to data from theAssociation of Mutual Funds in India. Retail investors are nowset to make July the 15th straight month of net inflows, fundmanagers say.
Retail investors are helping extend an almost two-year stockmarket rally just as India's $100 billion social security andpension fund too begins to invest in equities for the firsttime. "Retail investors are finally coming back to the market,after almost five years of muted participation," said SundeepSikka, chief executive officer of Reliance Capital AssetManagement.
The increase in domestic investors, fund managers say, couldhelp reduce price volatility, even if domestic retail investmentflows remain a fraction of the size of foreign investment inIndia. This matters, at a time when an expected
U.S. interestrate hike could lead to some foreign investors pulling out inthe short term.
Mutual funds owned about 3.33 percent of India's stockmarket capitalisation compared with 25.3 percent held by foreigninstitutional investors, as of March, according to an analysisof the constituents of the BSE 200 index by investmentbank Kotak. But an outperformance by mutual funds, compared tothe broader market, is helping to increase that proportion. Thetop 100 equity mutual funds, which manage a combined $42.1billion in assets, gained about 21.4 percent over the past year,beating a 10 percent rise in the benchmark NSE index,Lipper data shows.
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