Equities in favour
₹202.45 billion from July. Small- and mid-cap schemes were in favour, with their combined inflows exceeding ₹67 billion in August, compared with ₹57 billion in July.
The broader interest in equities is staggering and helps explain the strength of Indian markets, which saw the Nifty index cross the psychologically important 20,000 mark on Monday. Interestingly, it’s the mid- and small-cap stocks that have been attracting the most interest.
With India’s economy looking poised to grow at a rapid clip, investors appear to be betting on these companies, grabbing a bigger chunk of the benefits as they go along. But price movements in these segments also tend to be more volatile, which means investors are exposed to sharp losses in the event of any reversal.
To be sure, their valuations may be high, but they are not too high, implying their rally may yet have steam left. As future earnings are increasingly priced in, the risks also climb of projections not panning out as expected.
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