Demonetization has no adverse impact on Mutual Fund market and declining bank rates bound to enlarge its size:Mehta

Ahmedabad: The mutual fund market has not been affected by the demonetization move so far and is likely to gain from it in coming days owing to drop in bank rates, a top manager of a leading asset management company said here today.

In fact in November’16 the equity segment of the mutual fund market was at a record monthly high at 13000 crores while in the previous months it was on an an average of around 7500 crores. In December’16 it was at around 8000 crores, which was second highest in any month in the year, National Head of Sales and Distribution of Kotak Mahindra Asset Management Company told newsmen adding that so far no visible adverse impact of demonetization on the Mutual Fund market has been noticed.

He said that with the large amount of deposits in the bank available post demonetization and decrease in the interest rates, people would now look for better returns and the increasing awareness about Mutual Funds and SIP’s, the investment in this segment is bound to go up.

To a query he said that it was still too early to predict the overall impact of demonetization on the economy and industries. ‘We need 2 to 3 more quarters to have a fair idea about that. In first 10 days post demonetization many large auto and FMCG companies had predicted a bigger downfall in their sales than actually happened. Auto giant Maruti Suzuki had then predicted a 25 to 30 % decrease in their sales but it turned out to be a 7 % rise. Similarly for many FMCG companies which feared a drop of up to 40% in sales, it was much less at 10 to 15%. The market had over-reacted in the beginning. To have a fair Idea we need 2 to 3 more quarters,’ he said.

Talking about Gujarat, he said that the state had always been a leading region in equity investment, be it primary or secondary one or mutual funds, SIP’s. ‘Owing to a cult of sorts in the state with regard to equity investment, as of December 2016 the assets under management (AUM) in the state was around Rs 1 lakh crores. It has a 7.5% share of equity market in the country. Even the cities like Vadodara ( Rs 9 to 10 thousand crores of AUM), Suarat (8 to 10 thousand crores), RAjkot (6 thousand corres) were investing substantially in the equity market,’ Mehta said.

Mehta was here in connection with the launch of Flex SIP/STP of his company. He said that it would help in better utilization of market volatility by automatically making higher investments when markets valuations are lower. It was based on trailing Price to Equity ration (P/E) of Nifty 50 index.

DeshGujarat