Do we have enough retail money in debt markets?
retail investors are late to the party. Many times, their entry is seen as an indication of the peak of an ongoing rally in the stock market. However, the upswing in mid-cap and small-cap stocks is all initiated and funded by retail money.
Retail investors have put their best foot forward by committing their money to smallcap equity schemes and midcap equity schemes.
For example, as per the monthly data releases by the Association of Mutual Funds In India since April 2022, smallcap equity funds and midcap equity funds have seen net inflows of Rs 48,650 crore and 33,486 crore respectively. This has pushed up the prices of stocks.
Systematic investment plans, the preferred means of investing in mutual funds for individual investors, have been a force to reckon with.
The monthly contribution of SIP is on the rise and stands at Rs 16,927 crore for October 2023. Individual investors have been investing in stocks directly, as well.
Now let’s look at the other big segment of market participants.
Foreign portfolio investors, foreign institutional investors – FII, as they are popularly known, have been heavy sellers in Indian equities. Since September 1, till November 9 they have sold stocks worth Rs 43,659 crore. In the past, when FIIs used to sell such a big amount in equities, our markets used to crumble.
But in the aforesaid period, the Nifty 50 index is almost flat with gains of 0.7%. Selling by these institutional investors is well absorbed by domestic flows. It speaks volumes about the strength of the stock market rally.
