As the economy is showing some signs of recovery, domestic institutional investors are pumping money in a big way into the stock markets even as FPIs are pulling out. In November, while FPIs pulled out $1.1 billion, mutual funds, life insurance companies and banks invested $1.3 billion in equities, indicating growing confidence of domestic investors for an upturn in the economy. For the first time in the history of asset management industry, total equity assets under management crossed the Rs 4-lakh-crore mark. Despite a volatile stock market—the 30-share Sensex touched its all-time high of 30,025 points on March 4 this year and touched a low of 24,833 on September 8—investor sentiment was not dampened in November.
Investments by EPFO in exchange-traded funds tracking benchmark indices Sensex and Nifty—the retirement body will invest R5,750 crore in stocks in FY16—have also given a boost to equity. Even in life insurance, sales of linked-plans have grown significantly in the last six months. Returns from equities have been quite good as the benchmark has given more than 30% return since the start of 2013. In contrast, gold has given a negative return of 15%, while real estate, measured in terms of Residex by NHB, gave just 7% return. Rising domestic investments can be a counterbalance to FPIs and help the stock market gain more stability and depth over time.