Market Review – September 2024
World happenings:
If there is one thing that September ’24 will always be remembered for, it will be Israel’s audacious planting of pager bombs in Lebanon. Natural disasters, like wildfires in South America, floods in Central Europe and typhoons – Helene and Yagi in the USA and Vietnam respectively; took a heavy toll on human lives and property. Surprisingly, the S&P 500 had a record close at 5,762.48 points. This could be attributed to Federal Reserve rate cut and China’s announcement of stimulus plans. While the much awaited Trump-Harris presidential debate was uninspiring at best. The Oasis – Ticketmaster dynamic pricing of concert tickets in the UK and Coldplay’s ticket scalping in India had all the ingredients of a masala movie! For the record, there were 10 million people queueing up online for 1,80,000 tickets. In sports, world no. 1 Jannik Sinner beat Taylor Fritz to win the US Open men’s single title. And the suitability of Lapata Ladies as India’s entry to the upcoming Oscar awards is open to debate.
Sensex started from 82,559.84 points on Sept 1st to reach a new high of 85,136.12 points on Sep 26th. The month ended at 84,299.78 points after falling 1272 points in a day due to geopolitical tensions. Gold prices also saw an upward trend - from Rs.73,181 to Rs.75,290 for 10gms of 24cts purity.
Open-ended equity mutual fund inflows dropped by 10% month-on-month (MoM) to Rs.34,419 crore in September, driven by slower demand for large-cap funds, according to data released by the Association of Mutual Funds of India (AMFI) on October 10. Despite this dip, inflows into open-ended equity funds remained positive for the 43rd consecutive month, reflecting continued investor interest.
The decline in inflows comes in contrast to a strong performance in the equity markets, with Sensex and Nifty rising by 2.4% and 2.3%, respectively, marking the largest monthly gains for the indices since July.
SIP investments continued to surge, with monthly contributions reaching a record high of Rs.24,508.73 crore in September, up from Rs.23,547.34 crore in August. Venkat Chalasani, CEO of AMFI, celebrated the milestone of over 5 crore unique investors, along with a folio count surpassing 21 crores. He highlighted the efforts of AMCs and distributors in spreading financial literacy across the country.
Equity Funds
In the equity category, large-cap funds experienced a significant 33% drop in inflows, down to Rs.1,769 crore. Meanwhile, small-cap funds saw a slight decline in net inflows to Rs.3,071 crore, compared to Rs.3,209.33 crore in August. Mid-cap funds remained relatively stable, with inflows of Rs.3,130 crore.
Among the gainers, multi-cap funds—which invest a minimum of 25% each in large-cap, mid- cap, and small-cap stocks—saw a 42% jump in inflows to Rs.3,509 crore. On the other hand, sectoral and thematic funds, which had attracted significant interest over the past year, saw a 27% decline in inflows, settling at Rs.13,255 crore. However, fund mobilization through New Fund Offers (NFOs) in this category remained robust at Rs.10,202 crore during September.
Debt Funds
The fixed-income segment witnessed a sharp reversal, with debt mutual funds seeing net outflows of Rs.1.14 lakh crore in September. The outflows were likely driven by advance tax requirements faced by corporates at the quarter’s end.
Short-term debt funds bore the brunt of the withdrawals. Liquid funds experienced the largest outflows, with net selling at Rs.-72,666 crore, followed by money market funds, which saw outflows of Rs.23,421 crore. Overnight funds also faced significant withdrawals, with Rs.- 19,363 crore in outflows.
Despite challenges in certain fund categories, the mutual fund industry continued to show resilience, driven by sustained SIP growth and increasing participation from retail investors.
Conclusion:
September 2024 was a month of stark contrasts, while global tensions and natural disasters captured headlines, markets showed resilience. The S&P 500 reached a record high, supported by stimulus measures and rate cuts. In India, the Sensex hit new highs before being impacted by geopolitical concerns. Although equity mutual fund inflows dipped, SIP contributions surged to an all-time high, showing strong retail participation. Despite significant outflows in debt funds due to corporate tax obligations, the mutual fund industry continued to thrive, highlighting investor confidence amidst uncertainty.
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