Post-COVID Returns Inflated Expectations, Sanity Returns to Markets: CEO of Mirae Asset Investment Managers

Market Analysis: India's Growth Story Remains Intact Despite Global Uncertainty

Mirae Asset Investment Managers (India) vice Chairman and CEO Swarup Mohanty has sought to alleviate investor concerns regarding the impact of the Iran war on markets. According to Mohanty, corrections are a natural phase, and India's growth story remains intact.

The current state of the mutual fund industry in India is characterized by a shift towards normal cycles, with equity markets correcting and asset allocation becoming more aligned with fundamentals. Gold and commodities have become accepted components of portfolios, while bond yields have returned to pre-Covid levels. This presents a favorable environment for investors and asset managers alike.

Demographic changes are also driving behavioral trends in the industry. By the end of the year, around 60 to 65% of new investors will be under 30 years old, potentially becoming the largest portion of the investor base. This younger demographic is more willing to own their risk, which is a positive shift for the industry.

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Asset Under Management (AUM) in India has grown to over Rs 80 lakh crore, with steady inflows, including lump sum investments, despite market corrections and global uncertainty. Investors are beginning to understand valuations and long-term investing better, demonstrating maturity.

Younger investors are showing interest in small-cap funds, flexi-cap funds, and multi-cap funds, as well as ETFs. A recent change to a gold ETF, allowing for trading in gold derivatives, is seen as a safety mechanism rather than a new development.

The market has not performed as it did immediately after Covid, with a return to normal behavior and a focus on fundamentals such as earnings, valuations, and long-term growth. This is a normal part of the cycle, and investors should understand the asset class and its suitability before investing.

Geopolitical uncertainties, including rising oil prices and global tensions, may impact investor sentiment in the medium term. However, India's strong growth story and attractive valuations make it an attractive destination for investors.

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