Despite the equity indices rallying to life-time highs, retail investors are less likely to enter the market due to the uncertainty about future direction, say fund managers.
Mutual fund managers also expect that some investors may exit their investments, resulting in redemption pressure.
“There is less likelihood of the retail investors coming into the market as they are in a wait and watch mode as of now. If market performs consistently, then inflows are likely,” Baroda Pioneer Mutual Fund managing director Jaideep Bhattacharya told PTI.
He said his fund house has not seen any redemption pressure so far, but investors may exit to book profits.
Sensex closed at a record high of 21,196.81 on Friday on the back of sound FII inflows. Even on Thursday, the index closed at a record high.
Interestingly, mutual fund industry has lost 35 lakh retail folios in the first six months of the current financial year, which is mostly attributed to market rally seen since September.
“The ongoing market rally is due to FII inflows. Many retail investors had burnt their fingers last time due to FII driven rally in the past. So, the likelihood of retail investors entering the market seems remote this time around,” LIC Nomura Mutual Fund chief executive Nilesh Sathe said.
He is also of the opinion that the industry may see redemption pressure due to rally in the market. Sathe further noted that investors may relocate their investments to balanced funds where capital protection is high.
Quantum Mutual Fund chief executive Jimmy Patel, however, said there can be a trickle of inflows from retail investors due to higher market levels.