Equity fundraising through qualified institutional placements (QIPs) has gained traction, thanks to supportive equity markets and the need for fresh fundraising to meet capital expenditure (capex) requirements.
'...which is possible through flexicap and multicap funds.' 'The latter has a better balance between large, mid and smallcap stocks.'
'Investors should focus on largecap funds, flexicap funds, business cycle funds, or hybrid-category funds.'
It's not only the Indian markets that command a valuation premium over their global peers; shares of subsidiaries of India-listed multinational companies (MNCs) also trade at rich valuations compared to their parent companies. An analysis of 12-month forward price-to-earnings (P/E) and price-to-book (P/B) multiples of domestically listed MNCs shows that most quotes have a premium ranging from 2.1x to 6x that of their parent. Similarly, P/B, in most cases, is significantly higher in the domestic market.
The cash pile within smallcap mutual fund (MF) schemes has grown over the past few months amid a relentless rally in stocks in this space. While fund managers usually don't make cash calls, incessant inflows and valuation discomfort have forced their hand. At the end of January, the top 10 schemes had over Rs 12,160 crore in cash, compared to Rs 8,700 crore in August 2023.
'Historically, the markets tend to perform well during election years as governments aim to increase spending and call attention to growth.'
Net inflows into two of the 'lower risk' equity funds - largecaps and flexicaps - outpaced the flows into smallcap funds during January 2024 for the first time in 17 months. This is an indication that investors may now be shifting to the relatively safer largecap stocks after a sharp run up in the mid and smallcap spaces. Net inflows into large and flexicap funds were at Rs 3,730 crore last month against Rs 3,260 crore by smallcap schemes.
'We are cautious only on sub-sectors that have seen massive melt-up during the past six months.'
The Securities and Exchange Board of India (Sebi) is reviewing the current stock categorisation framework followed by actively managed equity mutual funds (MFs) to ensure they are true-to-label. Individuals familiar with the matter said the universe of largecap and midcap stocks could be expanded by 25-50 stocks. The move follows concerns raised by industry players that the current threshold has been skewed following a sharp run-up in the domestic markets after the Covid-19 pandemic.
Several mutual funds (MFs) have recently approached the Reserve Bank of India (RBI) as they renew efforts to increase their overseas investment limit. In June 2022, the capital markets regulator Securities and Exchange Board of India (Sebi) permitted MFs to invest in foreign stocks within the aggregate mandated limit of $7 billion after a correction in stocks. One of the proposals shared with the RBI is to link MFs' foreign investment limit to the country's foreign exchange reserves.
'With China falling out of favour, India is where investors see the demographic and digital dividend apart from the benefits of reforms playing out.' 'Your prime minister has also done a great job of sharing this story with the world.'
'Investors with higher risk appetite and longer horizon (more than one year) can invest in longer-duration funds like corporate bond funds, long-duration funds and gilt funds for maximum gain.'
India's mutual fund (MF) industry had barely any retail footprint when it completed 50 years in 2013. MFs had Rs 7 trillion in assets under management (AUM) in March 2013, of which around Rs 5 trillion was in institution-focused debt funds. By comparison, bank deposits in the country stood at Rs 67.5 trillion around the same time.
The mutual fund (MF) industry had an action-packed 2023 as it tackled the scrapping of tax benefits for debt fund investors and surging flows into equity funds.
Foreign portfolio investors (FPIs) sold shares worth Rs 20,170 crore ($2.4 billion) recently. This marked the fifth-highest weekly outflow from overseas funds since the beginning of 2008 and the largest since the last week of March 2020. Due to the Covid scare, FPIs had sold shares worth Rs 21,951 crore during that week, causing the market to decline by nearly 20 per cent.
'.. if you do not want to take the asset allocation call.'' 'This category of funds can offer optimum risk-adjusted returns.'
'Higher valuation remains the only spoiler for equities.'
Most market analysts are expecting the momentum to shift towards 'quality' and 'growth' stocks in 2024 after the outperformance of 'value' stocks over the past three years. 'Value' stocks are generally well-established companies with steady profits that are trading at a discount to what they are intrinsically worth. Companies in sectors such as commodities, industrials, commercial vehicles and public sector units (PSUs) fall in this bracket.
Investors are reluctant to take long-term positions this year after the spectacular gains in 2023. The delivery-based trades on the National Stock Exchange (NSE) have declined to below 36 per cent this year from an average of 38.1 per cent in 2023. Investors tend to seek delivery for stocks where they see a long-term investment opportunity or tactical positional trade.
Mutual funds (MFs) added systematic investment plan (SIP) accounts at a record pace in 2023 with the net additions in the calendar year surpassing 15 million - 24 per cent higher than the 2022 tally of 12.2 million, according to data from the Association of Mutual Funds in India (Amfi).
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