“The trend towards the financialisation of assets in India is unmistakable. Aligned with changing consumption behaviours and a need for a higher standard of living, investors recognise the importance of long-term investing. The COVID-19 pandemic underscored the necessity for financial planning and the creation of liquid assets to address emergencies and pave the way for wealth-building,” FYERS Research said in its report.
It further said that “despite indices exhibiting strength, propelled by robust economic activity, steady GST collections, and confidence in government reforms and policies, anticipating a similar outperformance in 2024 may not be prudent. Valuations across various market capitalisations look elevated, advocating a cautious approach to direct equities in the short term”.
As per the FYERS report, the January-March period of 2023 saw the highest number of NFOs at 57. However, the peak fund mobilisation occurred in the July-September period, totalling Rs 22,049 crore.
Additionally, 29 thematic or sectoral funds raised an aggregate of Rs 17,946 crore in 2023. With an increased risk appetite for equities and awareness of products and offerings, retail investors opted for higher-risk products like thematic and sectoral funds compared to other products. Usually, NFOs come during a surging market when investor sentiments are high and optimistic. The NFOs were floated to capitalise on the mood of investors and attract their investment as they were willing to invest at that time. Industry experts said that the stock market performance along with the positive investor sentiments led to higher fund mobilisation through NFOs in 2023. In the year 2023, Nifty 50 index delivered a return of 20 per cent, majorly supported by earnings growth. Nifty Midcap and Nifty Smallcap indices recorded impressive returns of 47 per cent and 56 per cent, respectively.
Domestic Institutional Investors (DIIs) infused a substantial Rs 1.7 lakh crore into the market and the infusion played a pivotal role in propelling Indian equities beyond the USD 4 trillion market capitalization milestone.
Overall, the mutual fund industry saw a net inflow of Rs 2.74 lakh crore in 2023 as compared to an inflow of over Rs 71,000 crore in the preceding year. The huge inflow could be on the back of sustained investors’ interest in equity funds, arbitrage funds, and index funds & ETFs.
Debt schemes experienced a net outflow of Rs 46,100 crore last year, while equity schemes saw substantial inflows of Rs 1.62 lakh crore, closely followed by hybrid category schemes at Rs 93,208 crore.
