Indian Indices Finish Strong; FMCG & Banking Stocks Witness Buying

Fri, 7 Dec Closing | Monish Vora, TM Team

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Indian share markets traded on a positive note throughout the day and ended on a strong note. Gains were seen in the bank sector, FMCG sector and auto sector, while oil & gas stocks and PSU stocks witnessed selling pressure.

At the closing bell, the BSE Sensex stood higher by 361 points (up 1%) and the NSE Nifty closed higher by 93 points (up 0.9%). The BSE Mid Cap index ended the day up 0.2% and the BSE Small Cap index ended the day down by 0.3%.

Asian stock markets finished on a positive note. As of the most recent closing prices, the Hang Seng was down by 0.3% and the Shanghai Composite was up by 0.1%. The Nikkei 225 was up 0.8%.

The rupee was trading at 70.66 against the US$.

As per Association of Mutual Funds of India (AMFI), retail investors continued to pour money in mutual funds through systematic investment plans (SIPs) in the month of November.

This comes as the industry received Rs 79.8 billion via the SIP route in November, a rise of 35.4% on a YoY (year-on-year) basis.

The figure, however, remained flat month-on-month despite the volatility in the stock market.

SIP AUM increased to Rs 2.31 lakh crore in November from Rs 2.17 lakh crore in the previous month. SIP folios also increased to Rs 2.52 crore in November from 2.49 crore last month.

Average Assets Under Management (AAUM) of the industry for the month of November 2018 stood at Rs 24,031 billion, registering a growth of 5% on YoY basis and 8% on month on month basis.

The total number of folios as on November 30, 2018 stood at 79.7 million, witnessed an increase of 23% on YoY basis. Within that the retail segment stood at 67.1 million, up 27% YoY.

Note that 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 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 where in one can periodically invest a fixed amount in a mutual fund scheme. It is similar to a recurring deposit where in 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 aviation sector, Jet Airways share price was in focus today after media reports suggested Etihad Airways has offered to finance as much as US$ 200 million to Jet Airways to keep the airline operational.

As per the news, the airline had sought US$ 350 million in soft loans from its investment partner Etihad Airways, as it continues to hold discussions with the latter to offload additional stake in the carrier.

To know more about the company, you can access to Jet Airways' latest result analysis and Jet Airways' 2017-18 Annual Report Analysis on our website.

From the IT space, HCL Technologies share price was in focus today after the company said it is acquiring select IBM software products for US$ 1.8 billion.

As per the news, the products which represent a total addressable market of more than US$ 50 billion include the products in areas like security, marketing and commerce.

The acquisition, which is the largest in the history of HCL, is expected to close by mid-2019.

To know more about the company, you can access HCL Tech Q2FY19 result analysis and HCL Tech Annual Report on our website.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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