“SIP is here to stay as a way of investing in mutual funds, as a headline number of ₹13,500 crore-plus reflects rise in new registrations, more people coming in through MFs....Having said that when another asset class, like bank FDs or fixed income, becomes attractive, we might see some stoppages. But, at the end of the day it is an upward trend and SIP as an asset class would become permanent as far as mutual funds are concerned," he added.
“We saw ₹8,000 crore per month inflow go up to ₹13,000 crore-plus, and over the next three years it could well double to ₹26,000 crore. More and more people have understood the purpose of SIP and if they invest for the long term, equity generates good returns."
SIP collections were up to a record high of ₹13,573 crore in December, up from ₹13,306 crore in the preceding month. However, the stoppage ratio (the percentage of SIP stopped against new registrations) rose to 66% last month from 48% in November. The fund managed by Balasubramanian expects higher inflows in debt MFs in 2023, with returns of 7-7.5%, against 8-10% returns from equity and 5-7% from gold.
On the prospects of new-age firms, which have seen a dramatic fall in valuations from the highs of the past year, he said: “There is huge scope of startups to flourish , given that India is becoming a digital economy, whether in payments, or in consumer behaviour. Our view is that few of these companies have been able to establish themselves as formidable players in particular segments and competitive intensity in those space has been taken care of. Road to profitability is visible in some companies in five years, and they can be valued more based on profits rather than the earlier matrix of revenue, or number of users or transactions."
According to him, the stock market can be divided in secular growth stories, cyclical growth stories—domestic cyclical versus global -cyclical—and new age companies, which can be further divided into growth-oriented topline-driven companies versus bottomline-driven companies.
