Ajit Dayal of Quantum Advisors cautions about the dangers of high allocations in smallcap funds due to liquidity concerns and stresses the importance of governance in investments to ensure profitability and mitigate risks in the Indian market. Dayal also says: "European capital for India is also important and European capital is increasingly trying to find alternatives to be in other nations besides China."
Equity mutual funds experienced a 16% decrease in March inflows, totaling Rs 22,633.15 crore. Sectoral/thematic funds led with Rs 7,917.72 crore inflows, while smallcap funds faced outflows of Rs 94.17 crore.
Small and midcaps facing valuation concerns and caution from SEBI. Investors advised to assess risk appetite and liquidity needs. Proper asset allocation crucial for managing risk. Long-term investors should stay invested despite current market conditions.
Smallcap funds led the way in equity mutual funds, followed by Infrastructure and midcap funds. Noteworthy performers included Quant Small Cap Fund, Quant Mid Cap Fund, and Motilal Oswal Midcap Fund, showcasing impressive returns over five years.
SEBI and AMFI s alert focuses on valuations, a rare move by regulators. Gates will be put to manage expectations. Investors, fund CEOs, and fund managers will act in tandem to protect smallcap funds and mitigate market risk. Promoters, EPF money, and FII money play a crucial role in the market.