Record Mutual Fund Inflows, But Markets Stay Flat – Why? | Govindraj Ethiraj | The Core Report

Описание: On Episode 432 of The Core Report, financial journalist Govindraj Ethiraj talks to Ajay Awtaney, Founder and Editor of Live From A Lounge.

(00:00) The Take: Location is becoming history
(05:09) Markets are flat even as mutual funds see record inflows
(06:19) Will India Depreciate The Rupee?
(08:06) SIP’s cross Rs 25,000 crore a month as long term investors stay plugged in
(10:47) A full service monopoly takes over India’s airways. Vistara signs off & becomes Air India

The Take: Location is Becoming History:

Success once meant making a great product and selling it at a profit. But in recent decades, profitability has hinged more on where production occurs. Indian manufacturers have moved to tax-friendly locations within states like Silvassa, Pantnagar & Haridwar. They enjoyed corporate tax exemptions and excise duty benefits, which have now ended with the GST’s arrival. Today, location hunting has gone global. Indian garment companies, for instance, have shifted production to Bangladesh.

The U.S.-China trade tensions could hit global manufacturers. Steve Madden plans to cut its Chinese production by 40% within a year. Others, like Whirlpool, face similar challenges, potentially raising prices. Many companies are diversifying, moving production to Vietnam, Cambodia & Mexico. Indian manufacturers may fare better if they streamline costs domestically, though tariff uncertainties persist. This shows that location as cost-saving strategy is fading, and companies must produce closer to consumer markets despite higher costs.

Markets Are Flat, Record Inflows:

The Sensex hovered around 79,000-80,000, closing at 79,496.15, with the Nifty50 slightly down. Broader markets, including the Nifty Smallcap100 & Midcap100, faced over 1% decline. Foreign investors remain cautious about Indian valuations, considering the MSCI India’s PE ratio is 22.8, far above emerging markets' 12.08. Nonetheless, Indian sovereign bonds & the rupee remain attractive due to the RBI’s stabilizing FX policy, sustaining investor interest.

Will India Depreciate The Rupee?

The rupee hit a record low of 84.3925. Bloomberg reports the RBI may allow further depreciation to keep pace with the yuan, though it will use reserves to mitigate volatility. Analysts expect the rupee to breach 85 soon, as it remains one of the world’s least volatile currencies thanks to the RBI’s reserve support.

Mutual Fund Bonanza:

Equity mutual funds saw record inflows in Oct, with SIP contributions at Rs 25,322.74 crore, an all-time high. SIP accounts hit 101 million. Overall equity inflows reached Rs 41,887 crore, up 21% MoM, marking the 44th month of consecutive net inflows, showing mutual funds' enduring appeal.

Corporate News:

Asian Paints shares dropped over 9% due to price cuts & softer-than-expected demand, marking its worst performance since 2020. Compounding this, Grasim’s entry into the paint market adds further pressure on pricing. Meanwhile, Tata Steel faces challenging conditions as global steel prices hover around $500 per tonne, hoping that Chinese stimulus measures might ease exports and improve pricing.

Air India Vistara:

November 11 marked Vistara's final flight as it merges with Air India, becoming India’s sole full-service airline. The brand's legacy will continue under the Tata Group's ambitious $400 million fleet retrofit for Air India, a merger aiming to create a formidable global airline. Singapore Airlines will hold a 25.1% stake in the merged entity, strengthening India’s aviation market. Ajay Awtaney, editor, LiveFromALounge, shared his perspective on Vistara’s legacy before taking its last flight, emphasizing the changes travelers can expect in the coming months.

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