Monthly systematic investment plan (SIP) flows into India have held steady above Rs 13,000 crore in 2022-23 (FY23) in the face of markets delivering muted returns in 18 months. However, it is not a rose-tinted view when it comes to viewing new SIP registrations and the cessation of existing ones. The ratio of SIPs stopped as a percentage of fresh SIPs registered (called SIP stoppage or closure ratio in industry parlance) stood at 56 per cent in the first 11 months of FY23, compared with 41 per cent during the same period of 2021-22 (FY22).
In the face of tax blow, brokerages remain sanguine about the prospects of asset management companies (AMCs). A sharp correction in the shares of AMCs over the past three months factors in most of the negatives and turned valuations attractive, observe analysts. In its latest report, Kotak Institutional Equities (KIE) has upgraded HDFC AMC to 'add' (from 'reduce') and reprised 'add' and 'buy' ratings on the rest of the listed AMCs - Nippon, UTI, and Aditya Birla Sun Life.
Over 85 per cent of SIP AUM, or Rs 5.8 trillion, is in equity schemes, compared to just Rs 6,100 crore in debt.
Arbitrage funds have recorded net inflows for three months straight, after steep outflows for half a year before that. The trend changed as mutual fund (MF) schemes improved amid a rise in equity market volatility. Investors redeemed over Rs 31,000 crore from arbitrage schemes between June and November before putting in Rs 3,000 crore in the last three months, shows data from the Association of Mutual Funds in India (Amfi).
Analysts say domestic banks' dependence on local depositors insulates them from the crisis.
UBS stepping in to save Credit Suisse with a $3.2-billion acquisition has provided the beleaguered Swiss bank's India employees a glimmer of hope. The surprise deal - engineered by the Swiss government - has triggered optimism of fewer job losses at Credit Suisse's India unit and better synergies at key verticals, such as wealth management and investment banking. "UBS is a much stronger hand. Coming within its fold will give Credit Suisse's wealth management and investment banking divisions a good home.
'Although mid- and small-cap funds have the potential for higher growth, they come with inherent higher volatility.'
The steady inflows from systematic investment plans (SIPs) into mutual funds (MFs), coupled with outflows from debt schemes, has propelled the share of SIPs in the total assets being managed by the industry to a new high of 17.1 per cent in February. SIPs are used predominantly by retail investors. Nearly seven of every 10 SIP accounts are in equity-oriented active MF schemes.
Mutual funds' average cash holdings in equity schemes topped 6 per cent in February as fund managers went slow on deployment of new inflows on expectations of better buying opportunities amid uncertainties in the market.
Despite strong AUM growth, MFs lag behind other popular investment avenues. MFs received only 6 per cent of total household savings in 2021-2022.
The mutual fund (MF) industry has seen a fair number of new entrants in the last 10 years but none of them have proved to be much of a challenge for the larger players. The list of top 20 fund houses, which manage over 90 per cent of the industry's total assets, continues to be dominated by players who have been in the business for more than a decade. Bajaj Finserv MF may change that, say experts.
US-based boutique investment company GQG Partners has shot into limelight with its Rs 15,446-crore Adani wager.
Equities are the go-to asset class as far as ultra-long-term returns are concerned. Over the past 123 years, global equities have provided an annualised real return of 5 per cent in US dollar terms, while bonds have delivered 1.7 per cent and short-term bills just 0.4 per cent, according to Credit Suisse's Global Investment Returns Yearbook 2023. In collaboration with the London Business School, Credit Suisse has analysed over 100 years of returns for key asset classes in 35 countries.
The Securities and Exchange Board of India's (Sebi's) proposal to re-introduce "hard underwriting" is seen as step to boost India's moribund initial public offering (IPO) markets. The regulator has proposed that in case an IPO fails to garner full subscription, the investment banker or a third-party can buy the unsubscribed shares. This practice was common during fixed-price issues prior to 1999. However, under the new book building regime, underwriting is allowed only to the extent of shortfall due to technical rejection of bids - this is referred to as "soft underwriting" and is rarely invoked.
Shares of Life Insurance Corporation (LIC) of India hit fresh record lows amid sustained decline in Adani Group stocks. Its stock finished at Rs 567.8, down 2.9 per cent over its previous close. The state-owned insurer's market value is now down Rs 2.4 trillion, or 40 per cent, compared to initial public offering levels.
Now that bank FD rates have gone up and most BAFs haven't delivered good returns, these investors are likely to be moving back to FDs, observed a senior MF distributor. The performance of BAFs in the past year has been mixed.
'Investors should ideally consider equity allocations from a medium-to-long term perspective.'
The Securities and Exchange Board of India (Sebi) has proposed to put a stop to the practice of certain directors occupying permanent board seats at listed companies. The regulator has suggested that the directorship of any individual serving on the board should be subject to periodic approval from shareholders, at least once in five years. In a discussion paper issued on Tuesday, Sebi said a few promoters enjoyed permanency on the board, giving them an undue advantage, prejudicial to the interests of public shareholders.
'The reason being we cannot let premiums go beyond a certain point.'
Friday will be a landmark day for domestic markets, with all the listed stocks entering the professed T+1 (trading plus one day) settlement cycle. About 200 stocks, which account for more than 80 per cent of India's market capitalisation, will be settled on a next-day basis, with effect from January 27. This will evidently complete the transition to the T+1 cycle that started in February 2022 with the bottom 500 stocks in terms of market value.
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