Retail investors show new faith in equity SIPs

In the BSE Sensex’s recent conquest of the 30,000-point milestone, retail investors are demonstrating behaviour that mutual funds have been seeking for a long time: stability through markets good and bad. An analysis of assets under management (AUMs) held by retail investors in equity funds since 2009—when the Sensex hit 10,000—shows a departure from the traditional retail narrative of trying to time the market. Instead, they are investing in greater numbers, especially through systematic investment plans (SIPs), the antidote to the market-timing habit.

Retail AUMs in equity funds

Between September 2014 and March 2017, when the Sensex gained 11%, folios (mutual fund accounts) of individual investors expanded 35% and equity AUMs 76%. Even when the Sensex fell twice (13% and 8%), both metrics kept gaining.

 

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Retail folios

Since a rising market lifts asset values, more than AUMs, a better metric of new investments is number of folios. And since September 2014, retail folios have risen consistently, even in a choppy market.

 

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Investments via equity SIPs

As of March 2017, there were 13.5 million SIP accounts. In 2016-17, the industry added an average of 0.62 million SIP accounts per month and total monthly contributions increased by 39%.

 

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News in Numbers, Oct 4, 2016: Firing and shelling from across the border…

52.1

What is it? India’s Manufacturing Purchasing Managers’ Index (PMI) in September, a composite indicator of India’s manufacturing activity based on a survey by Markit, a financial information and services company.

Why is it important? Though it expanded for the ninth straight month due to increase in new orders and purchasing activity, the rate has slowed down from 52.6 in August (which was at a 20-month high). This was due to inflationary pressures, though this is still lower than historical standards and that the central bank may cut interest rates in 2016. The next monetary policy review is today.

Tell me more: Companies saw new export orders expand at the fastest pace in 14 months.

 

4

What is it? The number of times Pakistani troops violated ceasefire on Monday, targeting Indian Army posts and civilian areas along the Line of Control (LoC).

Why is it important? Five civilians have been injured leaving several shops ablaze. The Indian Army retaliated and said that a Pakistani post Twiven1 was destroyed. There have been 10 ceasefire violations since the surgical strikes by India on the night of September 28/early morning the next day. As many as 405 cross-border firing incidents by Pakistan have been recorded last year where 17 civilians lost their lives, leaving 71 injured.

Tell me more: On Sunday night, fidayeen (belonging to a suicide squad) militants launched an attack on a 46 Rashtriya Rifles army camp in Baramulla. Though it was foiled, two Border Security Forces troopers were injured, one of whom died later.

 

178

What is it? The number of runs by which India defeated New Zealand in the second test match on Monday at Eden Gardens, Kolkata.

Why is it important? With this, India has reclaimed the top position in the ICC Test Rankings from Pakistan. This is irrespective of how India performs at the third and final test match to be held in Indore starting October 8. India was behind Pakistan by a single pointand needed to win the series to get to number one position. This would be the fourth time that India would reclaim the top position since the current rankings system was introduced in 2003.

Tell me more: After India and Pakistan, Australia, England and South Africa round up the top five ranks. India has been ranked number one between November 2009 and August 2011, January-February 2016 and in August 2016.

 

6

What is it? The number of Japanese Nobel prize winners in medicine.

Why is it important? The latest to win the Nobel is Tokyo Institute of Technology biologist Yoshinori Ohsumi. He won the 2016 prize for his work on the mechanics behind autophagy, a basic cellular function in which cells break down parts of themselves for reuse. Ohsumi showed this process helps also helps in fighting off infections with bacteria and viruses, and in generating energy under stressful situations.

Tell me more: Ohsumi is the 23rd Nobel Laureate to be born in Japan. This is the third consecutive medicine Nobel win for Japan.

 

377

What is it? The rise in Sensex, India’s benchmark equity index, on Monday a day ahead of monetary policy announcement by the new Reserve Bank governor and monetary policy committee.

Why is it important? The 1.35% rise in Monday is seen as a reflection of market expectation that the interest rate will be cut down. Equities tend to go up when interest rates go down. It remains to be seen if Urjit Patel takes a hawkish stance against inflation like his predecessor Raghuram Rajan and keep it steady to tame inflation, or if he (and the committee members) would go with the demand of the industry and politicians and cut the rate.

Tell me more: The easing of tension between India and Pakistan could also have helped in the market move on Monday. Sensex dropped by over 450 points last Thursday on the news that India carried out surgical strikes on terrorist launch pads across the line of control.

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News in Numbers, June 20, 2016: Early impact of Rajan’s exit, Karnataka cabinet reshuffle…

26,486.57 points

What is it? The level at which Sensex, the benchmark of the Bombay Stock Exchange, was trading at (9.16 am) today down 139.34 points or 0.52% lower from Friday’s close at 26,625.91 points.

Why is it important? The markets were expected to slump today, after RBI governor Raghuram Rajan announced that he would return to academia when his term expires in September. Rajan is credited for arresting the decline in the rupee among other things and his announcement influenced the currency to fall by 60 points to Rs 67.68 in early trade today. This only adds to worries about Britain’s exit from the European Union, which may result in capital flight from emerging markets such as India, and delayed monsoon in the country.

Tell me more: Under Rajan, the wholesale price inflation and consumer price inflation, which were as high as 10.5% and 7.05% in September 2013 when he took over, slowed down to 5.76% and 0.79% respectively.

 

700

What is it? The number of tablets the Statistics Ministry reportedly would use to conduct its Periodic Labour Force Survey.

Why is it important? This would be the first time ever that a government data collection exercise would be done using modern technology instead of the usual pen-paper method. This would improve accuracy of data collected and also, be faster – reducing the lag between the time data gathered and data disseminated.

Tell me more: The Periodic Labour Force Survey is conducted every three months and provides information on data points including Labour Force Participation Rate, Worker Population Ratio, Unemployment Rate and average earnings of self-employed, regular wage/salaried and casual workers.

 

Rs 20,000

What is it? The cap on coaching for competitive examinations for students belonging to the scheduled castes (SCs) and other backward classes (OBCs). This will now be done away with and the entire expenditure will be borne by the central government.

Why is it important? This would help students in these categories pursue higher education and employment. Right now, as a group, they lag behind the general population. The Census 2011 data shows that education levels are lower among SC groups across the states, compared to the non-SC population.

Tell me more: Under the revised guidelines, the central government would ask the states and the union territories to propose the names 5-10 coaching institutes with good record of past performance and from this, a final list would be made to provide coaching to the SC and OBC students.

 

14

What is it? The number of ministers Karnataka chief minister Siddaramaiah has fired reportedly for underperformance or involvement in controversies.

Why is it important? The move is an attempt to strengthen the Congress party ahead of the state elections in 2018. However, this is also likely to intensify infighting within the party. Karnataka is the only major state where the party is ruling, after being defeated in recently-concluded polls in Kerala and Assam.

Tell me more: The sacking of the 14 ministers led to protests by their supporters, resulting in violence and road blocks. They would be replaced by 13 newly-inducted members.

 

6/10

What is it? The number of people who share links on social media without reading the story.

Why is it important? Shows the role headline and summaries play. The age of social media, which comes with the advantages of having any information at one’s fingertips, has also resulted in propagating decontextualized, inaccurate, or even false information that in turn, could shape collective opinions and agendas.

Tell me more: The study was done by Columbia University and French National Institute. According to another recent study by Science Post, 70% of Facebook users only read the headline of science stories before commenting on it.

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News in numbers, Jan 19, 2016: Divide between rich and poor, India’s markets at 20-year lows…

 

$1.76 trillion

What is it? Wealth owned by the world’s 62 richest people in 2015, according to Oxfam, an international anti-poverty confederation of 17 organizations. It’s down from 388 individuals in 2010.

Why is it important? Highlights the growing divide between the rich and the poor as this amount is equivalent to that owned by 3.6 billion people, the poorest half of the world’s population. Since 2000, the latter have received just 1% of the total increase in global wealth whereas 50% of that increase has gone to the top 1% of the population.

Tell me more: The wealth of the richest 62 people has seen an increase of 44% since 2010 while that of bottom half fell by 41%. The report says the average rate of return for billionaires in the last five years was 5.3%, which means the richest made $5 million per day from interest payments alone.

 

$35 million (~ Rs 240 crore)

What is it? The amount food delivery startup Swiggy has raised in Series C funding from existing investors SAIF Partners, Norwest Venture Partners, Accel Partners and new investors including Harmony Partners, RB Investments and an undisclosed global investment entity.

Why is it important? This comes at a time when food tech companies including Zomato, FoodPanda and TinyOwl have been facing a series of problems –  funding slowdown and layoffs. The latest round of fund raising shows the rapid pace at which Swiggy, founded in August 2014, is attracting investor money. The Bengaluru-based startup has attracted its Series C funding from a year since it raised its Series A funding of $2 million. And, it raised its Series B funding of $16.5 million last June. The firm is now valued at $125 million.

Tell me more: Swiggy plans to utilise the funds to strengthen its presence in the existing locations besides technology upgradation for reducing overall delivery time and improving customer experience. Food delivery market in India is estimated to be $6 billion.

 

$0.99

What is it? The annual subscription fee that Whatsapp plans to scrap. It has been charging some users in US and UK a fee of $0.99 a year after a year of use.

Why is it important? Mobile apps depend on ads and/or subscription fee for revenues. Whatsapp had for long ruled out advertisement as a revenue source. By closing the subscription tap as well, it will now focus on new revenue streams. It plans to “test tools” that would allow its users “to communicate with businesses and organizations” of their choices. Whatsapp, which was acquired by Facebook for $19 billion in 2014, has not been in too much of a hurry to monetize its services, unlike its competitors. For instance, WeChat’s estimated average revenue per user is $7 compared to Whatsapp’s $1 per user.

Tell me more: Whatsapp has 990 million users across the world.

 

2,440

What is it? The number of students who have cleared the Chartered Accountancy (CA) Final exams held last November.

Why is it important? This is a pass percentage of 5.7% – a total of 42,469 students took the exam. The pass percentage in November 2015 is higher than November 2013’s pass percentage of 3.1%, which was the lowest in the previous five exams. It is much less than the highs recorded in the last decade or so: 28.3% in November 2007, 26.8% in November 2006 and 22.8 in May 2006.

Tell me more: The exam, which is widely considered a tough one to crack, is held twice a year – May and November. James John Britto from Chennai, Nagulu Mohan Kumar from Tirupati and Avinash Sancheti from Kolkata have been ranked first, second and third respectively in the country.

 

24,188.37 points

What is it? The level at which India’s benchmark stock index, Bombay Stock Exchange (BSE) Sensex, closed on Monday.

Why is it important? This was the lowest closing in 20 months – it had closed at 24,121.74 points on May 16, 2014. The Sensex has tumbled 18.5% from the highs of January 2015, close to the 20%-mark, which is considered bear-market territory by some investors. This slip has erased almost all the gains made by companies after the NDA’s landslide victory in the Lok Sabha Elections in May 2014.

Tell me more: The 20-year lows have been because of a combination of factors: export numbers released on Monday (which saw a 13th straight month decline), oil prices slipping below $28 per barrel, falling rupee and concerns over the health of China’s economy.

 

 

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