Share markets in India are presently trading on a flat note. Sectoral indices are trading mixed with stocks in the realty sector and IT sector witnessing maximum buying interest while and healthcare stocks are witnessing selling pressure.
The BSE Sensex is trading down by 24 points (down 0.1%), while the NSE Nifty is trading down by 7 points (down 0.1%). The BSE Mid Cap index is trading up 0.1%, while the BSE Small Cap index is trading up by 0.3%.
The rupee is trading at Rs 70.93 against the US$.
Note that while the markets are witnessing selling pressure lately, the SIP flows in to Indian stock markets are on the rise. Have a look at the chart below. It plots the month SIP contributions over the 31-month period between April 2016 and October 2018.
SIPs Continue to Rise Despite Market Correction
During the above period, SIP contributions have grown from Rs 3,122 crore in April 2016 to Rs 7,985 crore in October 2018, growing at compounded annual rate of 46%.
Currently, there are about 2.49 crore SIP accounts through which investors regularly invest in various Indian mutual fund schemes. As per AMFI data, the mutual fund industry added an average of about 10.05 lakh SIP accounts each month during the financial year 2018-19, with an average SIP size of about Rs 3,200 per SIP account.
Here's what Ankit wrote about it in one of the recent editions of The 5 Minute WrapUp...
- As I've shown you some of my earlier editorials (here, here and here), there's a structural change in the Indian stock markets. Domestic investors have emerged as key players in the Indian markets.
But there are a few questions that need to be answered...
Is this flood of domestic liquidity entering the markets a temporary fad? Or is there some element of long-term sustainability to it?
To answer these questions, the most reliable piece of data is SIP flows.
First, let me quickly explain what SIP is all about.
SIP stands for Systematic Investment Plan. It is an investment plan offered by mutual funds wherein one can periodically invest a fixed amount in a mutual fund scheme. It is similar to a recurring deposit wherein you deposit a certain amount every month.
SIP is a convenient method of investing in mutual funds through standing instructions to debit your bank account every month.
This not only saves you a lot of hassle, it also helps in averaging your costs and investing in a disciplined manner without worrying about timing the market.
For these reasons, SIPs have been gaining popularity among Indian mutual fund investors.
The liquidity pouring into the markets through SIPs is relatively stable, reliable, and long-term money.
If the trend in SIP inflows remains steady, it will provide the much-needed buoyancy to the Indian markets which have been witnessing an exodus of foreign investors.
In the news from the banking space, Yes bank share price is witnessing buying interest today after PTI reported that entities linked to the bank's promoter Rana Kapoor have paid Rs 2 billion each to Reliance mutual fund and Franklin Templeton mutual fund from whom they had raised funds by pledging shares.
In another news, the Reserve bank of India (RBI) on Monday began inspecting the bank's exposure to IL&FS, DHFL, Indiabulls group, and Sudhir Valia promoted entities Fortune Financial Services India Ltd and Suraksha ARC.
RBI's banking supervision team is currently looking at all statements since the date of sanction of loans to these accounts, internal and statutory auditor observations and terms of disclosures, among other documents.
The inspection is a follow-up to a letter that the central bank wrote to Yes Bank last Thursday seeking detailed statements regarding these exposures.
Yes, bank share price is trading down by 1.2%.
You can read Yes bank Q2FY19 result analysis and Yes bank annual report on our website.
Moving on to news from the commodity space, crude oil is witnessing selling pressure today as speculators indulged in reducing holdings amid a weakening trend overseas.
Record Saudi oil production pulled down crude prices amid cautious trading ahead of the G20 gathering that starts in Argentina on Friday and next week's OPEC meeting in Austria.
Saudi Arabia raised oil production to an all-time high this month, pumping 11.1 million to 11.3 million barrels per day (bpd).
Speaking of crude oil, India's crude oil production was lower by 4.2% in September 2018 as compared to last year.
It would be interesting to see how this pans out. Meanwhile, we will keep you updated on all the developments from this space.
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