Indian share markets are trading in the red presently. Sectoral indices are trading in the red with stocks in the telecom sector and metal sector witnessing maximum selling pressure.

The BSE Sensex is trading down 388 points (down 1.1%) and the NSE Nifty is trading down 137 points (down 1.3%). The BSE Mid Cap index is trading down by 1.8%, while the BSE Small Cap index is trading down by 1.7%. The rupee is trading at 64.58 to the US dollar.

Inflows through Systematic Investment Plans (SIPs) in Indian mutual funds (MFs) hit the US$ 1-billion mark in January.

Data by industry body AMFI showed that Rs 66.4 billion came into mutual funds in January, capping ten months of robust inflows as benchmark equity indices repeatedly scaled new heights.

The above development indicates sustained retail interest in equities and listed securities as an asset class against the traditionally favored real estate and gold investments.

Growing financial awareness has led to a rise in financial savings.

However, among financial assets, mutual funds still have a lot of catching up to do. The share of mutual funds in financial savings remains abysmally low at 2.9%. Currency and deposits, on the other hand, have a lion’s share of 40% whereas insurance and pension contribute a quarter each to overall financial savings.

India has the lowest mutual fund penetration globally. The total Assets under Management (AUM) to GDP ratio of India stands at a mere 10%, way below the global average of 55%. Countries like Australia and the US have AUM to GDP ratios of over 100%. This is evident from the chart below:

India Fares Poorly in Mutual Fund Penetration

So, the mutual fund industry in the country provides huge scope for growth and development. Real estate and gold have become less attractive forms of investments post notebandi. Even the reduction in bank deposit rates in the past year has led to a shift in investment to mutual funds and the stock markets.

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