BSE data shows that people in far-off places are also tilting towards the stock market, whether it is through mutual funds or direct investing. What are your thoughts on this phenomenon?
The base of equity culture is widening. About 30 years ago, we had a very strong equity culture with 27 stock exchanges across the country. We are going back to that kind of base. Of course, not in terms of having so many exchanges. Investors are coming from all over the country. There are two reasons for this.
In smaller cities and towns, what alternatives do investors looking for growth have? With interest rates being low, investors are looking for alternatives and they are finding many alternatives in the mutual fund domain. The young working population wants to invest money online just like they buy everything online. So it is coming from many sources but the driving force is that people are looking to put money where it can grow. Especially, in times of concerns that we have been living through in the last year-and-a-half, you want your money to do better than what you have been doing with yourself. You may have been getting a lower wage, maybe the livelihood is a bit under threat, your shop is not getting enough customers. You want to make sure that the money is deployed in the best way. Therefore, we are seeing it coming into the equity market, either directly or through mutual funds across the country.
Tell us more about flows in the mutual fund industry.
We did very well even when equity flows were negative for a while. We continued to get inflows partly because we are in smaller markets where people do not have many alternatives. The overall flows have seen a strong bounce back, particularly in the SIP space. People are now willing to try out new things. NFOs have attracted a fair amount of money. Funds of funds are investing money outside India. It is the first time we are seeing a sustained interest from retail investors in investing outside India. They have begun to understand that you can also make money somewhere else as well. While the domestic market is doing extremely well, why not put a few eggs in another basket!
From a global perspective, I think the tide has just turned. Even as late as a couple of weeks ago we were all talking about how FPIs are moving out and how bad will the second wave be. The situation now is a little different.
We have been told by experts and scientists that the next wave is a minimum of six months away or maybe even more. It may not even happen with the same intensity.
If I was a global investor, I would put some of my eggs back in emerging markets like India. We are seeing money coming back. The market is, therefore, getting ready for another run-up. Two months ago, a lot of people were negative on that.
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