Record SIP Inflows, IPO Boom, and Value Unlock in Indian Markets

Whether or not you invest in mutual funds through SIPs, I am sure you must have noticed the record-breaking SIP inflows driven by the retail investors month after month. Even amidst the turmoil caused by FIIs withdrawing from Indian markets, the enthusiasm of the Indian public seems unwavering. As per the latest SIP data released by the Association of Mutual Funds in India (AMFI), a staggering amount of ?26,459 was infused in December alone through SIPs.

In December, 4.5 million SIP accounts were discontinued — the highest number ever recorded. Despite the closures and the market corrections, the SIP inflows remained unaffected.

If we look at the Annual data, it has been rather impressive. Over the 9 year period, the amount of SIP inflow has grown at a CAGR of 20%, which signals increasing retail participation over the years.

For anyone uncertain about the future of the Indian Markets due to constant retreat by the FIIs, this should reassure them that India has arrived and India is not backing down. The Fund houses and the DIIs are sitting on huge cash reserves, waiting for the right opportunity to inject capital into the Equity markets. It is only a matter of time before the DIIs start buying.

We'll get back to SIPs, but for now let's talk about something which drew my attention the moment I caught sight of an article talking elaborately about the increase in IPOs in the recent past. As per the article the India has topped the Asian markets in number of listings, with a total of 268 listings spread across the Mainboard and SME category.

The IPOs also witnessed increased retail participation tempted by illusive Grey market premiums. Amongst the 90 mainboard IPOs which raised a total of ?1.8 trillion, about 1 trillion was spread amongst the 10 biggest issues, exhibiting the issue size disparity.

The reason I discussed about the aforementioned topics was to lay groundwork for the last topic. As of today, about 7500 companies are listed on Indian Stock Exchanges. Keeping a prudent outlook, let us assume that 2000 among them are investible businesses poised for growth. The number is still a far outcry against the amount of surplus that is just killing time, waiting to be deployed. This amount by all means with only compound with time, leading to an enhanced requirement of investible avenues.

No so much in the distant future, conglomerates such as Reliance Industries or TATA group will start listing their individual brands as separate entities with an expectation to unlock value which becomes really arduous once the company surpasses a certain level.

This has already started to turn to fruition. Just a few days before, the FMCG giant HUL announced that it is demerging Quality Walls, which will now be listed as a separate entity.

If you have reached till here, I sincerely thank you.

I hope this article added some value to your knowledge as it did to mine.