The Signal: The Week & More

1. The Mutual Fund Study – April 2021

MF AUM settled at record ₹32.43 Trillion As On April 2021, with SIP collections beating 12 month average at  ~₹8,600 Cr vs ₹ 8,025 Cr. April saw highest inflows of CY2021 at ~ ₹ 93,900 Cr vs outflows of ~ ₹30,000 Cr in the month prior. Industry AUM rose by 3% in spite of rising covid cases. Equity AUM increased by 1.2% To ₹9.80 Lakh Crs and Debt AUM Increased by 6.8% to ₹14.18 Lakh Crs.

The rush to debt amidst rising covid cases oomphed industry AUM by 3%. Liquid & Low Duration funds took centerstage acting as temp money parking facilities. Arbitrage recorded strong inflows as investors vouch for calibrated entry in capital market. gold aum increased by 10.7% as demand makes strong comeback amidst comforted prices.
 

2. The IIP Update

IIP grew of 22.4% in March’21 courtesy of low base effect, leading to it recording its highest figures since the imposition of lockdown last year. The expansion in IIP was primarily driven by manufacturing and electricity in a disproportionate manner vis-à-vis third element in mining (also recording positive figures).

The last twelve-month period data shows contraction in industrial sector of 8.6%, vs 0.8% fall in the corresponding period a year ago. Resurgence of health risks in fragmented pockets of the nation, disrupted supply-side economics and overly cautious retail consumption continue to be prominent risks to India’s full-blown economic recovery.

3. CPI Inflation Update

 India’s kicks off the new financial year with tepid inflation numbers post an upward facing scale in the 1st quarter of CY21. It recorded 4.29% in April, vs 5.52% (4-month high) levels seen in prior month. High base effect and falling food prices are primary for inflation figures coming in at three-month low. Forecast of normal monsoon vs gushing commodity prices are two ends of the balance scale.

CPI falls in RBI’s target range of 4 (+/-2) % for fifth consecutive month, with RBI extending target range till March 2026. Any further loosening can undermine the central bank’s ability to set effective monetary policy. It is likely for RBI to remain on pause in next meet and consider rate-cuts in near future after efficacy in transmission of prior rate-cut.

4. April 2021 – The Month That Was

If FY21 was all about the virus, FY22 is expected to be all about vaccines and its efficient distribution policies. Immediate result is seen in opening of trade borders, with the biggest medicine manufacturer of the world (India) being a direct beneficiary. There is visible hesitancy in the health and wealth of the Indian economy due to the ongoing second wave as the country preps to fight the expected third. The macros and micros (India inc.) have however stood surprisingly resilient.

Domestically, Indian markets delivered in the red even on the month’s closing even as India Inc. delivered better than expected results. The subdued delivery is deemed courtesy of first foreign outflows after a period of six consecutive inflows in a FII-driven market rally. As an investor actionable, view every forthcoming market dip as an opportunity to participate in India’s growth story. Enter markets in a calibrated method while keeping your risk acumen and appetite in mind.

5. G20 Meet & Greet Gives India A Positive Report Card

Economic Multilateralism and National Capacity Building will help nations recover from covid disruptions. Export and Demography prowess coupled with like-minded policies and practices can make India the hotspot for investments the world-over, thus kick-starting a global recovery from home. 

Coming out of trouble bubble has boosted India’s efforts to become the supreme everything-maker as much as it has set back its abilities to do so. In expedition of New Normal, the country is quick to adapting and improvising on current challenges to make them future opportunities for growth.