There is just too much excitement about growth of AUM in mutual fund industry and the rosy picture painted about future by extrapolating the data. But as Dhanjay at EMKAY writes and I had written few days back http://worldoutofwhack.com/2018/07/07/interest-in-mutual-fund-declines-to-one-year-low/ Indications from the industries suggest that the flush of money post the demon and GST dislocations, has already reversed…here is an interesting chart (via emkay)
The net purchases of mutual funds into the equity markets has declined to a monthly run rate of Rs 13bn in Aug’18 ( the daily data for aug is extrapolated to get the figures for aug) and actual Rs 40bn in Jul’18. The latest number is
~85% below liner trend since 2013 and 93% lower than the peak of Rs 172bn in Aug’17,nearly a year back. With this the monthly purchases are at pre-demon levels.
…and with this ,also goes a major support for market.
I am assuming mf’s are holding a lot of cash , could we expect a correction ritesh , also markets are at all time highs , so who is buying fiis may be ?
buying power is diminishing by the day. you need new long term money but the recent FII purchase is mostly ETF money which can also run away very fast. I always follow liquidity and every new high you need more liquidity to maintain the same level of market