HNIs poised to invest big in equity, eye budget

While political stability has helped the foreign institutional investors gain confidence about the Indian capital markets, the big ticket investors which include high net worth individuals and non-resident Indian are also are expected to pump in money afresh soon.
This group of investors was faced with a crisis of confidence till the end of March quarter and preferred to sit on cash. In wake of the economic slowdown, they kept investing a small part of their corpus in debt products only. With the market rallying again, their focus has now shifted to equities.
The emergence of a stable government with a reformist Prime Minister Dr. Manmohan Singh at its helm has stopped the waning confidence level of these high income investors. They are eyeing opportunities in India in the form of economic policies. Such opportunities are expected in infrastructure and retailing sectors, insurance and banking reforms, export boom, increased spending in power sector and disinvestments of PSUs.
They don’t seem much perturbed over valuations. Going forward, they expect high earnings growth from Indian companies from the impact of stimulus packages. Consequently in one year, they foresee re-rating of earnings per share of individual companies, which would end up in re-rating of P/E ratios.
Said Ashish Kukreja, vice president- PCG, Unicon Investment Solutions, “all high net worth individuals are once again bullish over India’s growth story. All of them are now sitting on the sidelines with huge cash. Once the budget is over, we will see considerable investment flows in equities from them.”

“Some HNIs have already started investing in equities post election, allocating 5-30 per cent of their total equity allocation. The negative sentiment amongst them is fully gone,” said Jaideep Hansraj, EVP & head of wealth management services, Kotak Mahindra Bank.
However, Kotak’s Hansraj believes investors would not rush into equities, as in 2007, despite the rising optimism. “Euphoria is more of a stable government’s policy expectations,” he commented.
According to a market grape vine, investment by high income individuals could touch 20-30 per cent of total FII investment (under current level) in the next two months. Money would come through either the mutual fund route or direct participation in equities. In May, FIIs net bought Rs. 21168.60 crore of Indian equity.
“In MFs, infrastructure funds will gain popularity among those investors,” added Unicon’s Kukreja.
“HNIs who can read world markets better having greater risk taking capability, are keenly waiting for an entry point into Indian equities. It alone suggests their faith on Indian markets, which has very much bottomed out,” said Raj Majumdar, founder and CEO, iMetanoia, a Bangalore based financial services firm.
Post-budget, there would a correction due to heavy expectations over new government’s budget, which might not be met, feels Majumdar.

Source: http://economictimes.indiatimes.com/HNIs-poised-to-invest-in-equity-eye-budget/articleshow/4620858.cms

Retail investors yet to join rally

While Indian investors are cheering the bull run in stock markets, nearly
3,000 point-rally in sensex post-elections seems to be the handiwork of foreigners. Foreign institutional investors (FIIs) seemed to be the ones doing most of the buying, while domestic institutional investors (DIIs) such as banks, financial houses, insurance companies and mutual funds have largely remained on the sidelines.
From the day markets first opened after election results (May 18) till Thursday (June 4), FIIs have made net investments worth Rs 12,000 crore in stocks with nearly 90% of that money coming in just four days, Sebi data shows. Out of the 14 trading days, which saw the sensex rising from 12,000 to 15,000, FIIs have remained net buyers on 10 occasions. This clearly shows how foreigners are more bullish about India. "The dirty little secret of the Indian economy is that it has actually been performing much better beneath the surface than the China comparison might otherwise suggest. India has long had a much better micro story than China," Stephen Roach, chairman of Morgan Stanley Asia, feels.
The turnover data for DIIs shows how they have not only been aloof to the idea of fresh investments but also remaining invested in the market. The net position after buying and selling done by DIIs is nearly (-)Rs 1,300 crore from May 18 till June 3, data combined for BSE and NSE shows.
Retail investors have largely stayed away. Experts feel many retail investors got little time to enter markets while others endlessly waited to enter anticipating a correction.

Source: http://timesofindia.indiatimes.com/Business/India-Business/Retail-investors-yet-to-join-rally/articleshow/4618821.cms

MFs catch up with bull run

Mutual funds (MFs) have caught up with the May momentum in the final lap. After remaining on the sidelines for quite sometime during the market rally, they have net bought equity to the tune of about Rs 1,800 crore during the last three trading days of May.
This is perhaps the biggest purchase in a short period after the rally began in March. The sharp buying in the last few days has made May the best month in fund activity as fund houses bought net equity (higher gross purchase over sales) worth Rs 2,291 crore, the highest since September when the market downturn began.
In all, MFs bought equity worth Rs 18,956.7 crore in May, the highest in 2009, data with the Sebi shows. The May purchases, which is more than three times of what MFs bought in February and 56.1% more than what they bought in April, is the highest in nearly 15 months.
"The long term outlook has turned positive. Though inflows are not high in absolute terms, interest is picking up," says Navneet Munot, CIO, equity, State Bank of India MF. While elections acted as a trigger, recent economic data has been supportive and results have been in line with expectations, he says.
MFs turned net buyers of equity for the first time in March lapping up equity worth Rs 11,721.3 crore in the month. However, their net purchases came down from Rs 1,475.3 crore in March to mere Rs 38.9 crore in April, data shows.

Source: http://timesofindia.indiatimes.com/Business/India-Business/MFs-catch-up-with-bull-run/articleshow/4618820.cms

Corporate, banks dominate mutual fund assets - AMFI

Corporate, banks and foreign institutional investors collectively control more than half the assets of Indian mutual fund industry, data compiled by the Association of Mutual Funds in India (AMFI) show.
The first ever break-up of investor class released by the trade body shows retail and high networth individuals held 1.8 trillion rupees worth of mutual funds or just over 43 percent of the industry's 4.2 trillion rupees assets at the end of March.
Fixed income funds, which contributed 70 percent to the industry's assets, is dominated by the non-retail investors. They controlled nearly three quarters of the 2.9 trillion rupees assets of fixed income funds that include money market funds.
Retail and high networth individuals were the main investors of equity funds that managed 1.1 trillion rupees at the end of March, the data shows.
AMFI plans to release the data every six months, a trade body official said.

Source: http://in.reuters.com/article/businessNews/idINIndia-40107020090605?sp=true

MFs investing in small cos clock big gains

While many large cap stocks with over Rs 10,000 crore in market capitalisation have lead the bull rally, mutual funds invested in mid-cap and small-caps have landed stellar gains riding stock performance. A quick look at around 35 mutual fund schemes that are known to have invested in smaller companies shows that the average fund's net asset value (NAV) has appreciated 90% in the last 3 months.
Topping the charts is SBI Magnum Midcap Fund having managed to gain 127% gains in the last 3 months. Others funds such as JM Emerging Leaders, JM Small & Mid-Cap, SBI Magnum Sector Umbrella Emerging Businesses, Principal Junior Cap, Sundaram BNP Paribas Select Midcap, Principal Emerging Bluechip, Canara Robecco Emerging Equities, DSP BlackRock Micro Cap and Sahara Midcap Fund have doubled their NAVs in the space of just 90 days, AMFI data till June 3 shows.
"When markets have momentum, mid-caps tend to outperform. Even when markets are range-bound, midcaps still perform reasonably well compared to larger companies. The only thing that could stall their rise would be 10-15% correction. I don't see any India-specific factor that would bring down the indices by that much," Vivek Pandey, fund manager of SBI Magnum Midcap Fund, said.
Others such as Birla Sun Life Mid Cap, DBS Chola Midcap, DBS Chola Small Cap, Franklin Indian Smaller Companies, JM Mid Cap, Sundaram BNP Paribas Select Small Cap and ING Midcap have given returns between 80% and 90% in the same period. Even the laggards have managed to deliver 60-65% returns in the last 3 months.
With benchmark indices mainly consisting of large caps and most stocks having delivered returns at the start of a bull run, smaller companies maintain rally in the next wave, point out analysts.
"It is interesting to note that while large caps typically go into consolidation mode after a strong monthly performance (May), the tailwind in the case of midcaps seems to be substantially better. This trend could be likely attributed to a contraction in the valuation gap as investor sentiment improves," Bharat Iyer of J P Morgan India said.
The presence of performing stocks as top-10 holdings that gave 100% returns such as Federal Bank, Balrampur Chini Mills, Bank of Baroda, Rural Electrification Corporation, Mphasis BFL, Mundra and stocks that 'tripled' in value such as Voltas and Sintex Industries in the same period widened gains for many funds. In the same period, BSE Midcap Index has appreciated by 100% and BSE Small Cap Index has jumped by around 110%.

Source: http://timesofindia.indiatimes.com/Business/India-Business/MFs-investing-in-small-cos-clock-big-gains/articleshow/4622748.cms