Opinion
Mint Quick Edit | Stocks: Retail investors are buying the dips
Summary
- Mutual fund inflows remain robust even as Indian market indices drop. Retail investments in small-cap and mid-cap funds saw a record surge in January. All-round buying, though, eludes us.
Indian stock indices have been falling, with foreign money exiting, but many domestic investors seem to see in this slump an opportunity to buy shares at lower prices. This is so even when it comes to less known stocks.
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In the small-cap and mid-cap segments, where price drops have been larger than declines in market indices composed of large-cap stocks, retail investor interest is high.
Data for January released by the Association of Mutual Funds of India showed a 22.6% surge of inflows into small-cap funds to ₹5,720.9 crore, while ₹5,147.87 crore went into mid-cap funds. Both these figures were all-time highs. Further, investments in large-cap funds were up 52.3% to ₹3,063.33 crore
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Overall inflows into equity funds during the month stood at ₹39,687 crore. While some of these came via systematic plans and may thus be inertia-driven, strong inflows point to retail confidence in Indian stocks, despite warnings of high valuations.
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The success of the mutual fund industry is a major reason that foreign investors pulling out have had less of an impact than such reversals in the past. But then, it usually takes all-round buying for indices to rise. And there’s no sign of that yet.
