Fund Investors in India Unfazed by Stock-Market Turmoil

The Indian stock market took a beat of over INR 11 billion in the last month. The Bombay Stock Exchange witnessed a drop of nearly 5% in just a matter of days. The crumbling currency and the crisis triggered by the troubled lenders were expected to leave fund investors in a state of panic, but contrary to that notion, the Indian fund investors have remained unperturbed by the recent developments in the stock market.

In the wake of the unchecked rise in the price of oil, and the rupee falling to even lower levels against the dollar, the default by non-bank lenders have impacted the mutual fund sector in a big way in a very short span of time. There has been an estimated loss of over INR 8.47 lakh crore to investor wealth owing to this market turmoil. India’s equity market was one of Asia’s top performers until the recent slump. Despite the recent change of status, Indian investors continue to keep a positive outlook. The influx of new investors in the equity market is also attributed to the policies implemented by the Government of India to encourage increased participation in this domain. Clamping down the currency in 2016 was one of the results of the initiative by the Centre.

Furthermore, the Indian equities have been cushioned by the support extended by local funds that help in keeping matters under check in events like the trade tensions between the US and China. Experts opine that the Indian retail investors, who are one of the major contributors to equity flows, are well versed with the need and the regularity of investments, which in turn averages the volatility. Having these retail investors contribute regularly has been helpful. Financial experts also believe that a falling market will always pull investors back in and help lift sentiments.