AHMEDABAD: At present, the stock market may have retreated from its high levels but the bull run on Dalal Street last year has made equity mutual funds (MFs) one of the most preferred investment options.
Riding on the share market rally along with fresh inflows into equitylinked mutual funds (MFs) from those seeking better returns, the total assets under management (AUM) of equity MFs was bolstered by a sizable Rs 41,552. 72 crore in Gujarat in 2021.
According to the data compiled by Association of Mutual Funds in India (AMFI), the AUM of equity MFs surged from Rs 92,355. 38 crore in December 2020 to Rs 1. 33 lakh crore in December 2021 — a whopping 45% increase. Financial analysts attribute the growth to the increase in the net asset value of prevalent investments due to the stock market rally coupled with fresh inflows from people anticipating good returns.
Pent-up demand, corporate earnings, and the revival in industrial production as well as an overall positive sentiment after the second Covid wave caused the stock market indices to rally. Growth in corporate earnings stock markets touched record-high levels in the second half of 2021 primarily fuelled by corporate earnings that almost reached a ten-year peak.
“The net profitability of the majority of Nifty 50 companies jumped on average to 25% from an estimated 7% in the previous years,” said Mumukshu Desai, the director of a city-based finan- firm. Desai added: “With interest rates remaining at rock bottom, corporates could restructure their debts and repay huge sums of their loans. This increased their profitability significantly. ” Pent-up demand, positive sentiment Pent-up demand led to sizable growth for most corporates in the third and fourth quarters of 2021,” Desai said.
“At the same time, expansion plans of companies also took off. With the good earning momentum of corporates, the market indices remained high. ” Moreover, the overall confidence of investors about the Covid-19 situation remained high with no lockdown imposed during the second wave. This kept market sentiments up, suggest analysts. With market indices holding firm, the net asset value of prevalent investments surged dramatically, translating into major gains for MF investors.
