Retail investor response to market swings a key challenge ahead, says Sunil Subramaniam of Sundaram Mutual Fund

livemint.com:

Sunil Subramaniam, MD and CEO of Sundaram Mutual Fund underscores the growing might of domestic investors. He highlights that retail investor behaviour during periods of volatility will be a challenge that could crop up in 2024 and needs to be appropriately addressed. In an interview with Mint, Subramaniam shared his views on the domestic market, economy and the upcoming Budget. Edited excerpts: The year has been a great one for the markets as domestic flows, especially the SIP (systematic investment plans) book, have been strong and giving buying support whenever FPIs (foreign portfolio investors) flows have slackened.

There has been a sharp increase in the number of folios at the smaller end of the cap curve. Given that these are inherently more volatile than the larger caps – retail investor behaviour during periods of volatility will be a challenge that could crop up and needs to be appropriately addressed.

Also Read: Nifty 50 set to clock healthy double-digit gains in 2023; what are the key challenges for the market in 2024? Consumption and banking and financial services should be the focus at the beginning and towards the end of the year – infra and capital goods depending on the progress in capacity utilisation and fresh capacity creation. Also Read: Market momentum may continue in 2024; FPI money will continue to pour into India, says Ajit Banerjee Yes, gold is a good investment option currently given the expectation of a prolonged two to three years rate cut cycle and consequent dollar weakness.

The ideal allocation would be two-thirds equities and balance gold for those investors comfortable with some degree of volatility. For more conservative investors 50:25:25 for equity: gold: debt would be more