Mutual fund flows to continue; elections key event: Target

 

By Nupur Acharya 

(Bloomberg) -- India is set to close 2018 as the best-performing equity market in Asia in local currency terms as strong domestic inflows helped counter the biggest selloff by foreigners in a decade. 

The S&P BSE Sensex advanced 0.3 percent to 36,166.33 as of 10:47 a.m. in Mumbai, taking its annual rally to 6.1 percent. That’s as MSCI Emerging Market Index fell 17 percent this year. The NSE Nifty 50 Index also added 0.3 percent after U.S. President Donald Trump reported “big progress” in trade talks with China. 

Local equity funds bought a record 1.2 trillion rupees (about $17 billion) of shares this year, negating sales of $4.4 billion by foreigners. Investors started warming up to the idea of mutual funds in 2014 as returns from gold and property dwindled. Stock plans account for 42 percent of the 24-trillion rupee industry assets, double the level four years ago. 

Strategist View 

“In the last couple of years, local flows have become more important than foreign inflows,” said Sameer Kalra, president research at Target Investing in Mumbai. “We expect the money coming through regular monthly plans into mutual funds to continue in 2019.” 

“National election in April-May is a key event to watch out for in the new year. Based on the outcome, large lump sum money investors will decide whether to enter the market or stand out a few months before volatility settles.” 

The Numbers 

S&P BSE Small Cap Index tumbled nearly 24% this year while the measure of mid-cap companies dropped over 13%. 

Equity funds took in an average of 80 billion rupees a month from savers. 
Flows to financial assets grew 17 percent in the year ended March, versus 9 percent in physical assets, according to Karvy Private Wealth. 

To contact the reporter on this story: 
Nupur Acharya in Mumbai at nacharya7@bloomberg.net 
To contact the editors responsible for this story: 
Divya Balji at dbalji1@bloomberg.net 
Anand Basu