Moneycontrol Pro Panorama | The indomitable faith of domestic investors

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As India concluded its mammoth general election, domestic investors upped their bets in domestic equity markets. Equity mutual funds saw record inflows in May and total assets under management reached Rs 59 lakh crore.

The massive inflows have helped equity markets overcome the election results disappointment. The benchmark Nifty 50 index is back at pre-election result levels. “The sanguine reaction of domestic non-institutional investors reflects their unshaken faith about high returns from the equity market,” Kotak Institutional Equities said in a note.

Indeed, the formation of the NDA government and reappointment of earlier leaders in crucial ministries assures policy continuity. Speculation that a resurgent opposition and a reduced majority will force the new government to step up welfare measures sparked buying in shares of consumer goods and so-called defensive sectors. Read Anubhav Sahu’s piece on how foreign investors should be viewing the market as a new Modi government takes charge.

Apprehensions about the new coalition government and future budget spending persist. Concerned investors will seek reassurances through electoral wins in the upcoming state elections.