As Ukraine crisis panic subsides, risk assets stage a comeback

As the initial panic post Russia's invasion of Ukraine subsided, risk assets staged a comeback. While the Nifty rose four per cent in March, the broader indices performed even better, shutting the mouth of the naysayers who were busy in drawing a hazy picture of the stock market in the view of the ongoing global geo-political crisis.

To elaborate it, the panic post Russia's invasion of Ukraine subsided to some extent and risk assets did stage a bit of a comeback in March. Interestingly, March was the sixth straight month of outflows from domestic equities. FPI sold net Rs41,123 crore of domestic equities in March. FPIs have pulled out Rs1,47,000 crore ($19.5bn) from domestic equities in last six months. This is the most intense spell of FPI selling that our markets have witnessed. In spite of this, both of the country's stock exchanges have been performing well.

Equity MFs saw the thirteenth straight month of net inflows in March (Rs28463 crore). AMFI numbers suggest all time high SIP contribution and Equity inflows in March. It is evident by the fact that investments through the SIP route crossed the Rs12000 mark for the first time. Multi-cap funds were the biggest recipient of inflows among all categories, says a report by IFA Global.

At Rs37,56,682.57 crore the net AUMs for the Indian Mutual Fund Industry reported growth, Average AUMs are at Rs37,70,295.79 crore in the month. Let us dive a little deeper into the MF investments to understand the situation better. Number of folios as on end-March 31 shows growth at 12,95,04,652 compared to 12,61,29,549 from end-Feb. Folios were registered at 9,78,65,529 March and 12,31,01,673 as on January 31.

To be precise, monthly SIP contribution collected is an all-time high at Rs 12,327.91 crore owing to investor faith in the SIP as an instrument and the resilience to stay invested in current market conditions. This also reflects that investor have been renewing and investing in new SIP in for the new financial year, which kick-started on April 01.

SIP AUM currently stands at Rs 5,76,358.30 crore whereas for February, it was Rs 5,49,888.76 crore. The month-on-month change is Rs 26,469.54 crore which speaks volumes of the confidence being shown by the retail investors in the capital market.

So much so that for growth/equity oriented schemes, the net inflow has seen surge at Rs 28,463.49 crore for the month compared to R s 19,705.27 crore for the preceding month. 23 different NFOs were launched under open ended schemes, 8 fixed term plan were launched in the period under review.

The only blip in the otherwise growth story is that bond markets have been nervous on expectations of higher inflation from elevated commodity prices, hardening US yields and on concerns over how the humongous government borrowing would go through this fiscal. Hope, the corrective fiscal measures by the government will help check this in the days to come.