Investor appetite for Systematic Investment Plan (SIP) continues to grow and the month of November was another success story for this investment plan. In November, SIP contributions boosted their record-high performance 13,307 crores. Along with this, contribution to Mutual Fund SIP shows that this investment mode is the most successful way of investing for retail investors. Also, it indicates a growing maturity among domestic investors for equity forms of investment. Experts are advising investors not to back out of SIPs despite the fall in the stock market.
India is by far the best performing macro market in dollar terms, FIIs booking profits but through domestic inflows, said S Ranganathan, Head of Research, LKP Securities gulp are at an all-time high, reflecting the growing maturity and confidence of domestic investors in over a year.
Also, Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services said, “Healthiest trend in Indian equities Market Now there is a continuous increase in SIP which has touched a new record of 13307 crores in November. It is a proven fact that SIP is the most successful investment vehicle for retail investors.”
However, though SIPs hit an all-time high, the upside was very slow and sluggish as contributions only inch higher 267 crore as compared to October’s print 13,040 crores.
Further, Vijayakumar pointed out that even though the total demat accounts crossing 10 crore is a desirable development, many novice investors are losing money in day trading and derivatives trading. He said, “This is undesirable.”
Good thing SIP is up 13,000 crore for the second consecutive month. Specifically, SIPs were up 12,000 crore mark between May and September before starting up 13,000 crores.
In contrast to this reckless trading culture, Vijayakumar said, “The rise in SIPs shows that Indian equity investors are maturing.” He suggested that it is important that SIP investors should not stop investing when there is a sharp fall in the market.
Inflows into the mutual fund market continued in November, with inflows into equities falling to a 21-month low, while the debt market outpaced equities. The star performers for November were index funds.
Overall, net inflows in mutual funds stood at 13,263.56 crore – less than the inflow of 14,046.98 crore in the last month. Index funds saw inflows in November On the other hand, inflows into equity and debt-oriented schemes stood at Rs 8,601.73 crore. 2,258.35 crore and 3,668.59 crore respectively.
Akhil Chaturvedi, chief business officer, Motilal Oswal Asset Management Company, said these trends indicate a maturity in the mindset of investors. SIP Contribution Above Balance 13,000 reflects better awareness among retail investors about long-term orientation of equity investment and wealth creation opportunities from India’s growth trajectory.
Further, Chaturvedi said, “Investors now have the understanding to look at short-term volatility as a part and parcel of equity investments. Instead of reading too much month-on-month into net equity inflows, the point to note is that net equity inflows remain relatively resilient and investors are willing to look past short-term trends and instead focus on longer-term fundamentals.”
Disclaimer: The views and recommendations given above are of individual analysts or broking companies and not of Mint.
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