June 24, 2024
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“Mutual Fund Sahi hai” campaign is successful.
Mutual fund flows have reduced dependance on FIIs, in the capital market.
FIIs have boosted the Indian capital markets since liberalisation. Increased foreign investment has helped strengthen India’s position globally. These investments have brought in resources and global perspectives on governance, enhancing India’s stature in the world economy.
While FIIs/FPIs were once considered the primary drivers of Indian capital markets, the investment landscape in India is changing as people adopt new investment avenues. In the last decade, equity mutual funds have not only emerged as the preferred channel for investment for the investor community but also diversified the investment landscape.
The Association of Mutual Funds of India (AMFI) has spearheaded the “Mutual Fund Sahi hai” campaign, which has increased awareness of mutual funds among the large investing community. Mutual funds are making it to the top of the bucket list due to the convenience of investing and better risk management, thereby contributing significantly to the Indian capital markets.
Since the early 2000s, Foreign Institutional Investors (FIIs) have played a significant role in the growth of the Indian capital markets. However, these investments have come with their fair share of risks. As the proportion of FII investments in the local markets increased, the Securities and Exchange Board of India (SEBI) took steps in October 2007 to moderate the inflow by imposing restrictions on foreign investments through Participatory Notes (P-Notes).
P-Notes accounted for approximately 25% of India’s total Foreign Portfolio Investments (FPIs) at that time. In the following five months, there was an outflow of approximately Rs 67,718 crores. However, during the same period, the Indian capital markets experienced an inflow of around Rs 20,00,922 crores, with mutual funds contributing about 65,801 crores.
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