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Rs 46,200 crore: Lump-sum inflows into equity mutual funds between September 2023 and February 2024
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Investors put Rs 46,200 crore in equity mutual funds in the six months ended February 2024. This is thrice the flow received during the previous six months.
While an increase in SIP (systematic investment plans) is laudable, the spike in lump-sum investments, especially at a time when the markets have been running up, is not a happy development. It poses significant risks. Most of these investors hope to reap high returns in a short period. In current conditions, a large part of this money is likely to have gone into smallcap and midcap stocks, whose valuations are already on the higher side after a huge run-up.
If the trend within the market were to reverse, these investors could face significant losses. Many of them are new entrants in the equity market. They would lack the patience and finance to wait until the markets recover. Many of them are likely to throw in the towel and convert their notional losses into actual losses. Taking the systematic investment plan route would be much safer.
First Published: Mar 29 2024 | 10:02 AM IST