Indian retail investors are getting smarter and matured as equity investors. Retail investors now don't get swayed away by the market volatility and use it to their advantage to accumulate at lower levels. Domestic liquidity is not only getting stronger but also smarter.
Over the last few years, domestic mutual fud investors have invested higher amount when there is a fall in equity markets. On the other hand, whenever there is a rally in equity markets, investors have turned cautious and invested lower amount at higher levels.
Retail investors buy lows..
- June 2019 to August 2019: Nifty 50 index fell by around 8% => Average monthly inflows into domestic mutual funds increased to Rs. 8300 crore from Rs. 5000 crore in immediate previous months.
- COVID-19 pandemic induced market fall in the year Feb/Mar 2020 => Monthly inflows in domestic mutual funds almost doubled to Rs. 8500 crore from Rs. 4500 crore.
- Fall from all-time high levels in October 2021 => average monthly inflows from November 2021 to June 2022 increased to Rs. 15500 crore as against inflows of Rs. 3000 witnessed pre market fall period of August 2021 to October 2021.
... sell high
- Just before COVID-19 pandemic induced fall in February 2020 => Inflows were lower at an average of Rs. 4500 crore per month as markets had rallied around 11% from the lows of 11000 on Nifty 50 index level in August 2019 to 12200 levels in January 2020.
- Markets continued to rally post COVID induced fall in 2020 => investors turned net sellers (outflows of Rs. 5850 crore per month from July 2020 to February 2021).
- Currently, since last 3 months from August 2022 to October 2022 => As markets have moved up and trading near all-time high levels, inflows have reduced to an average of Rs. 5900 crore per month from Rs. 15500 crore (average during November 2021 to June 2022)
Domestic mutual fund investors putting higher amount at lower equity levels and vice-versa
For details, click on the link below: Link to the report