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Focused <keyword id="19929240" type="General" weightage="20" keywordseo="mutual-funds" source="keywords">mutual funds</keyword>, which invest in a concentrated portfolio of <keyword id="19905382" type="General" weightage="20" keywordseo="stocks" source="keywords">stocks</keyword>, are gaining traction among investors with the <keyword id="22748135" type="General" weightage="20" keywordseo="asset-base" source="keywords">asset base</keyword> of the category growing to Rs 1.43 lakh crore in three months ended June 2024, marking an increase of 31% from a year ago. Interestingly, some of the focused funds offered by the mutual fund houses such as <keyword id="22748136" type="General" weightage="20" keywordseo="Invesco-India-Focused-Fund" source="keywords" meta.keywordsubtype="org" meta.entityname="Invesco India Focused Fund" meta.hostid="261" meta.entityid="Invesco India Focused Fund">Invesco India Focused Fund</keyword>, Mahindra Manulife Focused Fund, JM Focused Fund, and <keyword id="19896378" type="General" weightage="20" keywordseo="hdfc" source="keywords">HDFC</keyword> Focused 30 Fund delivered a remarkable return of 40-60% in the past year, industry data showed. Focused funds are a type of mutual fund where the fund manager selects a concentrated portfolio of stocks, typically limited to a maximum of 30 due to regulatory constraints. This requires the fund manager to be highly skilled in stock selection, as they need to identify the best investment opportunities across the market without bias toward any specific market cap or sector. According to data from the <keyword id="20090034" type="General" weightage="20" keywordseo="association-of-mutual-funds" source="keywords">Association of Mutual Funds</keyword> in India (Amfi), the assets under management (AUM) of the focused funds were at Rs 1.43 lakh crore in the June quarter 2024-25 as compared to Rs 1.09 lakh crore in April-June FY24. This growth highlights the appeal of focused funds as an alternative to portfolio management services (<keyword id="19950020" type="General" weightage="20" keywordseo="pms" source="keywords">PMS</keyword>), especially with recent tax changes that make PMS less attractive due to higher costs and tax implications, Feroze Azeez, Deputy CEO, of Anand Rathi Wealth Ltd, said. "With the increase in taxation on both small-term capital gain tax and long-term capital gain tax, PMS portfolios are expected to see a drop in post-tax returns. For example, a PMS portfolio generating a pre-tax return of 14 % could see post-tax returns drop from 11.73 % to 11.29 %. This shift could lead to fund managers churning portfolios less frequently, which in turn will be affecting returns for investors," he added. Focused funds follow a similar concentrated portfolio strategy where the fund manager picks the top stocks and offers flexibility across market caps. Thus, becoming a more attractive option for investors looking to optimize their returns. Industry experts recommend investing in focused funds through systematic investment plans (SIPs) as a smart strategy in the current market environment of sector rotation and high valuations. Since these funds invest in a small number of stocks, SIPs can help reduce risk by spreading out investments over time. Overall, there are 31 focused schemes offered by different mutual fund houses in the category. These schemes have given returns of 19-60% in the last one year. In terms of returns, smaller funds have performed exceptionally well. The Invesco India Focused Fund delivered a remarkable return of over 60% in the past year, while Mahindra Manulife Focused Fund provided around 50% returns and JM Focused Fund offered a return of 45% during the period. With a corpus of Rs 1,552 crore as of June 2024, Mahindra Manulife Focused Fund has consistently performed well, securing the second rank for 1, 2, and 3-year periods. The fund delivered returns of 50%, 32%, and 26% over these periods, respectively. HDFC Focused 30 Fund achieved the top rank over the 3 years with a return of 28.63 %, while JM Focused Fund secured the third rank with a 25 % return during the same period. "The success of focused funds underscores the importance of skilled fund management and strategic stock selection," an industry expert said. Focused funds opt for a more targeted strategy rather than the broad diversification typical of traditional mutual funds. This approach helps fund managers make investments in a carefully selected group of stocks, reflecting their strongest investment beliefs. The concentrated nature of these portfolios requires careful selection of each stock, as the fund's performance heavily depends on these choices. Although these funds hold a limited number of stocks, they are structured to be sufficiently diversified to effectively manage risk. Overall, the assets of the equity mutual funds rose to Rs 27.6 lakh crore in June 2024 from Rs 17.43 lakh crore in June 2023.

Focused MFs' asset base rises 31% to Rs 1.43 lakh cr in June qtr; up to 60% returns last year

Automaker <keyword id="19909974" type="General" weightage="20" keywordseo="maruti-suzuki" source="keywords">Maruti Suzuki</keyword> lndia has invested about Rs 1.99 crore in <keyword id="21061376" type="General" weightage="20" keywordseo="amlgo-labs-private-limited" source="keywords">Amlgo Labs Private Limited</keyword>, a technology-led startup. The startup operates in the area of data analytics, cloud engineering, machine learning (ML) and artificial intelligence (Al), to assist companies in data driven decision making. With this, Maruti Suzuki will own an equity stake of over 6.44 per cent in the startup, the automaker informed stock exchanges on Saturday. The investment is being made through the Maruti Suzuki lnnovation Fund, an initiative to undertake strategic investments in startups which exhibit high levels of technological innovation. This is the second such investment by the company. Earlier, the company invested in <keyword id="21061374" type="General" weightage="20" keywordseo="sociograph-solutions-private-limited" source="keywords">Sociograph Solutions Private Limited</keyword>, specialised in AI, in June 2022. "We have been working with startups since 2019, as a part of the Maruti Suzuki lnnovation Program. Aligned with the government's Start Up India initiative, we are actively working to help strengthen the startup ecosystem and encourage innovation to develop solutions relevant to the automobile industry," HisashiTakeuchi, Managing Director and CEO, Maruti Suzuki India. "Our investment in Amlgo Labs Private Limited will help us to further strengthen quality of new models, using advanced analytics and machine learning," Takeuchi added. According to <keyword id="20693796" type="General" weightage="20" keywordseo="ajay-yadav" source="keywords">Ajay Yadav</keyword>, Founder, Amlgo Labs Private Limited said, "Our collaboration with Maruti Suzuki has proven to be fruitful, helping our company augment and scale up operations. Combining our expertise in Data Analytics, Machine Learning and Artificial Intelligence based solutions, with mentorship and networking opportunities offered by Maruti Suzuki, we will be able to further refine our offering." Started its journey in July 2017, the startup firm has offices in Gurugram and Bengaluru in lndia and Delaware in the US. SEE ALSO:<a href="https://www.businessinsider.in/tech/mobile/news/oneplus-12-review/articleshow/108723955.cms" target="_blank"></a> <a href="https://www.businessinsider.in/tech/mobile/news/oneplus-12-review/articleshow/108723955.cms" target="_blank">OnePlus 12 review: A feature-packed device with promising battery back-up</a><a href="https://www.businessinsider.in/business/auto/news/jsw-group-and-saic-motors-jv-jsw-mg-motor-india-set-to-up-production-to-3-lakh-vehicles-a-year-with-a-new-car-every-3-6-months/articleshow/108647799.cms" target="_blank"></a> <a href="https://www.businessinsider.in/business/auto/news/jsw-group-and-saic-motors-jv-jsw-mg-motor-india-set-to-up-production-to-3-lakh-vehicles-a-year-with-a-new-car-every-3-6-months/articleshow/108647799.cms" target="_blank">JSW Group and SAIC Motor’s JV ‘JSW MG Motor India’ set to up production to 3 lakh vehicles a year with a new car every 3-6 months</a><a href="https://www.businessinsider.in/tech/news/asus-rog-strix-scar-16-review/articleshow/108514221.cms" target="_blank"></a> <a href="https://www.businessinsider.in/tech/news/asus-rog-strix-scar-16-review/articleshow/108514221.cms" target="_blank">Asus ROG Strix Scar 16 review – powerful gaming laptop with a cool design</a>

Maruti Suzuki invests in machine learning, artificial intelligence startup Amlgo Labs

<div type="image" title="Are Indians depositing less money in banks, or more in mutual funds? Turns out, it&amp;#39;s neither of those." msid="113663806" hostid="261" sizebytes="1121785"></div> Over the past few months, there’s been a lot of brouhaha about the lagging pace of <keyword id="20202062" type="General" weightage="20" keywordseo="bank-deposits" source="keywords">bank deposits</keyword> in India. Simply put, the rate at which Indians are depositing their hard-earned money in banks has been falling constantly, and some blame the increasing financialisation of <keyword id="20751315" type="General" weightage="20" keywordseo="household-savings" source="keywords">household savings</keyword> in the country or the rising preference of Indians towards <keyword id="19929240" type="General" weightage="20" keywordseo="mutual-funds" source="keywords">mutual funds</keyword> and shares. So, the hypothesis is that people are choosing to invest more in mutual funds and the Indian <keyword id="19949641" type="General" weightage="20" keywordseo="equity-markets" source="keywords">equity markets</keyword> through direct investments, IPOs, or NFOs, the money flowing into Indian banks in the form of deposits is slowing down. But is that really the case? <h2>A crisis or a phase?</h2><keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords" meta.keywordsubtype="org" meta.entityname="RBI" meta.hostid="261" meta.entityid="RBI">RBI</keyword> data suggested that for the quarter ended June 2024, bank deposits grew at 11.7%. On the other hand, credit growth has outpaced this at 15%. This means that the outflow from banks as loans is far greater than the inflow into them in the form of deposits in Q1 of FY 2024-25. The situation largely saw cut-copy-paste in the first week of September as well, with loans registering a 13.3% YoY growth during the period, while deposits rose only 11.1%. This gap has only been widening for the last 3 years. Since deposits are how banks gather assets to further lend and earn interest income as a consequence, even a slight dip could set the alarm bells ringing for banks, and rightfully so. And truth be told, mutual funds are indeed taking on bank deposits in a big way. Per a report by Franklin Templeton, in August 2024, the AUM (assets under management) of Indian mutual funds, or the total funds managed by them, stood at 31.3% of total bank deposits in the country, up from 24.20% during the year-ago period. As of August 2024, the AUM of mutual funds stood at Rs 66.17 lakh crore, an all-time high. But all said and done, is this really the reason why the rate of bank deposits is falling behind? SBI has dismissed this to be a “statistical myth”, and experts point out that since equity and fund houses also keep the cash in their respective bank accounts, there’s no cause for concern. So, is financialization really to be blamed for the trailing tempo of deposits? Or is something else happening behind the scenes? We take a closer look: <h2>First, are household deposits really slowing down? And is that a cause of concern?</h2>Data from Motilal Oswal suggests the contrary. Deposits grew by around 10.4% between March 2020 and August 2024. Data from RBI also highlights that as of August 9, 2024, bank deposits witnessed a YoY growth of 10.8%. The loan-to-deposit ratio for the retail segment, which indicates what percentage of its total deposits the banks lend out as loans, has stayed at 77.5%, above the 77% mark for the tenth straight month. <div type="image" title="Yes, household deposits (as % of total deposits) have dipped, but the drop is far from significant" msid="113663882" hostid="261" sizebytes="306706"></div> Also, we can’t forego the fact that the share of Indian households in bank deposits has indeed slowed down. However, data from Axis AMC shows that the dip is marginal—from 63% in 2022 to 62% in 2023 and 61% in 2024. What has slowed down even more considerably is the share of government deposits in the aggregate bank deposits, which has dipped from 14% in 2018 to 9% in 2024. So, it's not just household deposits, you see. Moreover, as of March 2024, the collective CASA ratio (current and <keyword id="114757" type="General" weightage="20" keywordseo="savings-account" source="Orion">savings account</keyword> deposits) of all commercial banks in India stood at 41.00%, down from 43.1% in March 2023 and 45.2% in March 2022, marking a nearly 5% point decline over the past year, while still staying over the 10-year average of 39.2%. This implies that Indian banks are relying more on higher-cost funds (savings accounts), which can limit their profitability. <h2>What is this financialisation of savings we are talking about?</h2>Then again, there is no doubt about the growing affinity of Indians towards mutual funds and stock markets. Recent data from CBDT (Central Board of Direct Taxes) highlights that India’s net direct tax collection surged by around 22%, driven exclusively by the significant uptick in the collection of Securities Transaction Tax (STT), which doubled to Rs 26,154 crore, from Rs 13,352 crore in the year-ago period. Why does this matter? STT is levied when you buy or sell equity shares on stock exchanges, sell <keyword id="6361918" type="General" weightage="20" keywordseo="equity-mutual-funds" source="Orion">equity mutual funds</keyword>, and trade in futures and options in the equity segment. Such taxes, including the multiple other taxes in equity market investments, are considered as leakages as the money moves out of the economy into government coffers. Data from a ValueQuest report explains that over the last 20 years, the markets have handsomely rewarded the investors, generating over $900 billion in incremental value for them. This is the major driver behind the dramatic rise in investment flowing towards the equity markets. There’s further proof of this budding romance, if you check the demat pudding. The number of demat accounts, which are a primary requisite for participating in the stock markets, also burgeoned by 42.3 lakh in August 2024, taking India’s total tally of demat accounts beyond 17 crore. To put this in perspective, this is almost equivalent to the population of just 8 nations in the world, including China, the US, Brazil and more. Vivek Iyer, Partner, Grant Thornton Bharat thinks it's rather important, as well. “Financialisation of household savings in India is an indication of deepening capital markets in the market, especially from a retail investor standpoint. Bank deposits with a modest rate of return are no longer the only option for savings for investors. Investors today have more avenues for wealth creation in the form of public capital markets, which have democratized wealth creation and provided equality of opportunity to retail investors”, he says. Yes, Indians are investing more and more in the markets, and in mutual funds. But is it a sin to look out for inflation-beating returns, which the stock markets offer, and vanilla bank deposits don't? After all, the allure of 12-13% annual returns offered by <keyword id="45369" type="General" weightage="20" keywordseo="equities" source="Orion">equities</keyword> can certainly pale the stability offered by good old deposits, which generally do not go beyond 9% when it comes to annual returns. But all of this is not what is behind the slowdown. India is still a toddler in the school of savings financialization, with less than 10% of the population holding a demat account, and less than 5% of us saving in equities. That's a drop in the ocean of deposits, far inadequate to trigger a tsunami. <h2>Tell me why lagging deposits have nothing to do with Indians investing more in mutual funds!</h2>Says Shweta Rajani, Head - Mutual Funds, Anand Rathi Wealth Limited, “Households' equity holdings composition grew from 11.1% in FY 23 to 14.7% in FY 24. This trend reflects a growing awareness of investment options, empowering individuals to take control of their financial futures. Despite this transition towards equities, banks still hold a significant share of household financial savings—33.5% in FY24 compared to 34.9% in FY23”. Also, household savings and their subsequent financialization do not have much to do with deposit creation, which is entirely made by banks. What actually drives increased deposits is credit growth or increased lending. When interest rates are eased, people tend to borrow more and spend more, which circulates more money in the economy. For the past 4 years, RBI has been tightening the screws on interest rates, which raises the cost of borrowings, and makes it more expensive to take loans, putting a dampener on credit growth, but effectively curbing inflationary pressures. The last time RBI cut the repo rate by 40 basis points was back in May 2020, 4 years ago. The lag in <keyword id="19998084" type="General" weightage="100" keywordseo="deposit-growth" source="keywords">deposit growth</keyword> we’re witnessing is almost 3 years old. Coincidence much, or just good old economics at work? But with the Fed recently setting a rate cut precedent by slashing 50 bps off its interest rate, RBI is expected to follow suit in the next MPC (Monetary Policy Committee) meeting, scheduled for November 2024. A rate cut would ease the aforementioned high cost of borrowing, and increase loan-taking for corporates and institutional investors, thereby stoking consumption in the economy. And then, deposit creation in banks is likely to return to its former glory. If not, then that would be a curious case to unravel! But that worry is for another day. Do you have insights or personal experience to share on your personal finances or money? Contact us at <a target="_blank" class="c-link" href="mailto:businessinsider@timesinternet.in">businessinsider@timesinternet.in</a>.

Simply Put: A Deposit Dilemma — What's the fuss about a crisis in Indian bank deposits? Are mutual fund investments to blame?

Tensions in Middle-East are rapidly inching closer to their zenith, with Iran firing about 200 ballistic missiles at Israel late yesterday night. In response today, the Indian markets witnessed their worst decline in two months, with Sensex dipping around 1,769 points, or 2.1% to close at 82,497.10. <keyword id="19896381" type="General" weightage="20" keywordseo="Nifty" source="keywords">Nifty</keyword> followed suit and was also down by 2.1% to close the day at 25,250.10. As a result, about Rs 11 lakh crore were wiped off the market today. The decline was broad-based, with sectors like realty (dipped by over 4%) auto, and energy suffering the most. Broader indices also fell, losing nearly 2% each. The Hang Seng index, which had rallied over 14% during the last week, largely on the back of various stimulus measures announced by the central bank to stir consumption in the Chinese economy, also slumped around 1.47%. With the possibility of an all-out war between Iran and Israel looming on the horizon, threatening to happen sooner than later, markets are expected to remain volatile in near future. Even the India VIX, seen as a gauge of uncertainty and investor fear in the market, jumped over 9% during the day. The war could throw a huge spanner on India's crude oil import plans. As of August 2024, about 44.6% of India's crude oil imports came from <keyword id="19904316" type="General" weightage="20" keywordseo="middle-east" source="keywords">Middle East</keyword>. Israel has already promised significant retaliation, in response to Iran's attack in the days to come. And the strong possibility of a full-blown Israeli attack in Middle East, particularly major oil fields in Iran has sent the crude oil prices surging. Closer home, ONGC (Oil and Natural Gas Corporation) was amongst the biggest gainers on NSE today. <h2>Should Indian investors worry? </h2>But is the impending action in Middle-East the only reason behind today's drastic fall? Vishnu Kant Upadhyay, AVP, Research &amp; Advisory at Master Capital Services notes that while it plays a significant role, other factors are also at play. "Recent regulatory changes in the F&amp;O segment by SEBI is expected to impact trading volumes, as retail participation may decline due to the increased contract size and limits on weekly expiries. Meanwhile, strength in the Chinese market, following the People’s Bank of China (PBoC) stimulus package, has also diverted foreign investment to China, where valuations remain more attractive compared to India", he noted. But Upadhyay believes that the extension of losses in Indian markets wont last long. "From a technical perspective, as long as prices hold above the 25,250–25,100 zone, any decline could present an opportunity to build fresh long positions. A stock-specific approach is advisable, with sectors such as Oil, IT, PSU Banks, Metals, and Chemicals likely to outperform in the coming days", he adds. Shrikant Chouhan, Head Equity Research, Kotak Securities observes that as long as market is trading below 25,365/82,800, the weak sentiment is likely to continue. On the down side, it could slip till 25,150-25,025/82,200-82,000 as well. On the other side, one quick technical pullback is likely if the market succeeds to trade above 25,365/82,800. Above the same, it could bounce back till 25,475-25,500/83,100-83,300. The current market texture is volatile hence; level based trading would be the ideal strategy for the day traders. <h2><keyword id="20760178" type="General" weightage="20" keywordseo="mutual-fund-investors" source="keywords">Mutual fund investors</keyword>, stay put</h2>In the aftermath of a <keyword id="19968045" type="General" weightage="20" keywordseo="market-correction" source="keywords">market correction</keyword>, most mutual fund investors often face a critical decision- should they stop their SIPs (<keyword id="21047553" type="General" weightage="20" keywordseo="Systematic-Investment-Plans" source="keywords">Systematic Investment Plans</keyword>) or to view the downturn as a valuable opportunity to acquire more mutual fund units? By continuing SIPs during such downturns, investors can take advantage of 'rupee-cost averaging,' i.e. accumulating more units when prices are down. This approach not only lowers the average cost per unit, but also positions the portfolio for greater returns when the market eventually recovers, and softens the impact of short-term volatility. Swapnil Aggarwal, Director, VSRK Capital explains that alongside maintaining regular investments, revisiting your asset allocation is also essential in these turbulent times. A well-diversified portfolio, that balances equities with safer assets like bonds can withstand market fluctuations more effectively. You can consider shifting some investments into bond funds or other stable instruments, which can provide a cushion against further declines. <h2>What happens next? </h2>While the immediate impact of a market correction may lead to declines in the NAV (Net Asset Value) of mutual funds, disciplined investors can view this as a moment to reassess their strategies. Focusing on your <keyword id="20908416" type="General" weightage="20" keywordseo="long-term-financial-goals" source="keywords">long-term financial goals</keyword> will let you turn market volatility into opportunity! The market will remain keenly focused on the evolving situation in the Middle East. What will also be equally important are the US monthly jobs data due tomorrow, which could determine the size of Fed's next interest rate move in November.

Nifty, Sensex in freefall today as Iran mounts attack on Israel. Here's what experts think you should do

June turned out to be a blockbuster month for thematic/sectoral <keyword id="19929240" type="General" weightage="20" keywordseo="mutual-funds" source="keywords">mutual funds</keyword>, which managed to amass Rs 22,351.69 crore during the month, the highest amongst all equity mutual funds. Overall, equity mutual funds saw <keyword id="19967545" type="General" weightage="20" keywordseo="inflows" source="keywords">inflows</keyword> worth Rs 40,537 crore, whereas debt mutual funds saw significant outflows of about Rs 1.07 lakh crore. Within this category, liquid and overnight funds saw maximum outflows. As Himanshu Srivastava, Associate Director – Manager Research, Morningstar Investment Research India noted, since June is a quarter end month, debt-oriented schemes, as expected, witnessed a net outflow. Only funds with a duration profile of less than 1 year, like low duration and money market funds, saw inflows. "The net outflow across the board could also be on the back of investors shifting towards equity markets in expectation of better returns, as the equity markets continue to touch all time high levels after the election results were announced. Between May and June, the number of folios in the debt segment fell from 7,091,977 to 7,013,214, which is a drop by 78,763 folios. In May, the number of folios fell by 26,088 folios". "Moreover, uncertainty over the interest rate cut cycle has also been keeping investors in tenterhooks. With no clarity on the probable timing for the beginning of interest rate cut cycle, investors, for a time being, would have decided to adopt a wait and watch approach and stay away from categories which are exposed to interest rate risks such as Dynamic and Gilt", he continued. <h2>SIP figures touch all-time highs</h2> As <keyword id="22344564" type="General" weightage="100" keywordseo="AMFI-data" source="keywords">AMFI data</keyword> further revealed, the number of new SIPs registered in June 2024 stood at a staggering 55,12,962. With this, the total number of SIP accounts in the country reached 8,98,66,962, inching up marginally from 8,75,89,485 in May 2024. SIP contributions also stood at an all-time high of ₹ 21,262.22 crores in June 2024 as against ₹ 20,904.37 crores in May 2024. The AUM of retail folios, which comprise of equity, hybrid and solution oriented was Rs 36,32,226 crores for June 2024. In <keyword id="22344565" type="General" weightage="20" keywordseo="hybrid-schemes" source="keywords">hybrid schemes</keyword>, multi-asset allocation funds garnered Rs 3,453.12 crore in June, and Arbitrage funds saw inflows worth Rs 3,836.58 crore. The only hybrid scheme to see net outflows were conservative hybrid funds, which shed Rs 130.57 crore. June marked the 40th consecutive month of positive inflows for <keyword id="20210668" type="General" weightage="20" keywordseo="equity-funds" source="keywords">equity funds</keyword> since March 2021. As Feroze Azeez, Deputy CEO, Anand Rathi Wealth Limited highlights, "SIP numbers are hitting peaks every month, accumulating a stellar ₹21,260 crore. This strengthens the fact that Indian investors are resilient and are participating in the long-term growth of the market. The overall market behaviour supported by numbers suggests that investors are strategically positioning themselves with cautious yet optimistic approach for long-term growth". Last month, the Indian MF industry hit the Rs 60 trillion mark for the first time. Exactly 10 years ago, in 2014, the industry's AUM stood at Rs 10 lakh crore. Just 6 months ago, its AUM was Rs 51 lakh crore. Anand Vardarajan, Chief Business Officer - Key Clients &amp; Alternate Investments, Tata Asset Management underlines that is growth is a huge validation when it comes to expanding retail investor's base and investors themselves choosing mutual funds as a reliable investment vehicle for wealth creation. This is further underscored by the fact that the addition in six months is equal to what the industry has seen in ten years ago! <h2>Large and Mid Cap funds find investors </h2>After garnering consistently high inflows in the recent past, small cap funds amassed Rs 2,263.47 crore, a slightly sobering figure. Midcap funds saw inflows worth Rs 2,527.84 crore. On the other hand, inflows in large-cap funds dipped at significantly to stand at Rs 970.49 crore. Far more investments went towards the large and mid-cap funds, which saw inflows worth Rs 2,912.19 crore. Melvyn Santarita, Analyst – Manager Research, Morningstar Investment Research India notes that these substantial net inflows can be attributed to the election results announced earlier in the month. Investors have remained optimistic and invested on policy continuity and anticipated reforms, expecting stability within the coalition government at the Centre. It was this optimism that propelled markets to new all-time highs. The multi-cap category witnessed the second highest net inflows in June 2024 among the equity-oriented categories amounting to INR 4,708.5 crores which was its 3rd highest net inflows ever over a monthly period. Categories which are biased towards the large-caps segment like flexicap (Rs 3,058 crores) and Value (Rs 2,027 crores) saw robust inflows during the month. "While markets have been in a prolonged bull run, there are concerns about overvaluations in certain areas, particularly in the mid and small-cap segments. Consequently, investors may be opting to invest in large-cap segments, where valuations are more favorable", Santarita highlighted. "However, they also continued their investments in mid and small caps, since the returns generated by mid and small cap segment over the last few years haven’t got unnoticed. Hence, the categories having substantial exposure in these two segments have witnessed strong net inflows. It is important to note that mid and small cap segments are highly volatile. While they can give exceptionally high return in up markets, they can fall equally hard in down markets. It’s important for investors to take exposure in these funds in line with their risk appetite", he cautioned. However, Hitesh Thakkar, Acting CEO, ITI Mutual Fund is confident of the immense wealth creation opportunities mutual funds will offer in the coming 5-7 years to retail investors. "Mutual fund is one of the preferred, transparent &amp; cost-effective investment products in India and is well accepted by retail investors. The trend is positive for Mutual fund industry future growth. There are chances that Industry will cross milestone of ₹100 lakh crores AUM by 2030”, he says. <h2><keyword id="19895579" type="General" weightage="20" keywordseo="gold" source="keywords">Gold</keyword> continues to glitter </h2>Net flows in Gold ETFs continued to be robust in June 2024, standing at Rs 726 crores. However, this was slightly below the net flows witnessed in May (Rs 827 crores). "Over the years, Gold has gained prominence as an effective diversifier, prompting many investors to include Gold ETFs in their portfolios. Gold prices also saw some slight correction in June which spurred buying from investors", underlines Santarita. However, the reason why inflows in gold ETFs have remained patchy as compared to equity is due to the significant gap in the returns offered. "Gold has done fairly well over the last year but dwarfs in comparison to how equities. Also, some investors could be choosing to opt for a risk-on approach to investing with the anticipation of a reversal in rate cycle going ahead", he continues.

Mutual fund AUM crosses the Rs 60 lakh crore mark, SIP nos. and AUM touch all-time highs

The entire country celebrating Raksha Bandhan today. But are you one of those elder siblings still mulling and stuck over the perfect gift to give your younger ones? Well, then it is time for you to move beyond your traditional gift ideas like sweets, gadgets, clothes, and jewelry, and invest in their future prosperity. How? By gifting them <keyword id="19905382" type="General" weightage="20" keywordseo="stocks" source="keywords">stocks</keyword>, or even mutual fund units. Here's a deep dive into how you can lay the foundations of a lasting bond with your siblings, and cement their financial future, one stock and one mutual fund unit at a time. <h2>How can I gift shares ?</h2>You can swiftly transfer shares online, provided both you and your siblings have a <keyword id="19977340" type="General" weightage="20" keywordseo="demat" source="keywords">demat</keyword> account. Many brokerage firms like Zerodha, Groww and others also offer this facility. For this, you will need to input details like your sibling's name (who you wish should receive these shares), particulars of their demat account, the amount of shares you wish to give as gift, and the name and 12-digit ISIN number of the company whose stocks you want to transfer. In addition, you will also have to provide the beneficiary owner ID of your siblings, reason for transferring these shares, and bank account details. In order to kickstart the process, you'll have to initiate what is known as an off-market settlement. This means without the stock exchange coming into the picture, two parties i.e. you and your sibling will mutually settle shares. For this, you will have to submit a delivery instruction slip (DIS) to your DP, or depository participant, which serves as a bridge between you and the depository. When you are transferring shares, you are essentially transferring your ownership of such stocks to them, and thus, you need to inform your DP and depository of the same. At present, there are only 2 depositories present in the country, namely NSDL and CDSL. You can submit this DIS both online and offline. If you have more than one siblings you wish to transfer shares to, remember to use separate DIS for each recipient's account. Once you initiate the transfer, your broker will send an email and SMS to the recipient, who will have 7 days to accept this. But remember, once you've transferred these shares, there is no provision to revoke this transfer. And just like with your clothes, accessories and everything else in life, your siblings will have full freedom and ownership to do whatever they deem fit with these shares! However, what you can certainly do, and make this gift more meaningful, is drive home the value of holding these securities for the long term, so that they are able to make the most of this investments. Ideally, a good start would be to start investing in stocks of large-cap, blue-chip companies, and them eventually complement them with small and midcap stocks, which offer higher legroom for growth. Per brokerage firm Master Capital Services Ltd, "consider choosing stocks from well-established companies with a solid track record and growth potential. It is essential to consider risk tolerance, investment horizon, and financial goals before selecting stocks for your brothers and sisters. The finest present you could give your siblings this year would be long-lasting financial stability". If you're looking for some stock recommendations you can consider for your siblings, we have you covered as well: <h4>Larsen &amp; Toubro Ltd. </h4>Why you should consider this? The company has shown consistent revenue growth and profitability in the past years while maintaining stability with its ROCE &amp; ROE of around 19% and 15%. L&amp;T has a significant global presence, with projects and operations in various international markets. This geographic diversification helps in tapping into global opportunities and reduces dependence on the domestic market. <h4>HCL Technologies Ltd. </h4>Why you should consider this? HCL Technologies is one of the IT giants of India, which is ranked amongst the top five Indian IT services companies in terms of revenues. HCL offers a wide array of IT, business services, engineering, R&amp;D services, and software products with operations in 60 countries. The company has been investing heavily in digital technologies, including cloud computing, artificial intelligence (AI), and automation. This focus aligns with current industry trends and positions the company to capture growth in the high-demand areas. <h4>TATA Motors Ltd.</h4>Tata Motors Limited is a leading manufacturer of automobiles and one of the largest OEM in India offering a wide range of passenger and commercial vehicles. Tata motors owns the flagship brand of Jaguar and Land Rover (JLR) which is a dominant automobile player in the global market. Its early entry in the electric vehicle segment has positioned it well ahead of many competitors and currently, it enjoys the largest market share in the EV segment in India. The focus on innovation and sustainability, along with a robust product lineup, positions Tata Motors well for future growth and market opportunities. <h2 style="margin-bottom: 0.7em; line-height: 1.3; color: rgb(0, 0, 0); font-size: 24px; background: 0px 0px; text-rendering: optimizelegibility;">Tax Implications of gifting shares</h2>The best part about gifting shares is that it is tax-exempt, since you're giving it to your relative. This means your sibling will not be liable to pay any taxes on this gift. However, to be on the safer side, make sure that the market value of the shares that you gift them does not exceed Rs 50,000, or else your siblings, i.e. the recipient will have to incur a tax liability. If your siblings decide to sell these gifted shares, they will have to pay LTCG (long-term capital gains) tax at the rate of 12.5%, or STCG (short-term capital gains) tax at the rate of 20%, depending on how long they hold these securities for. <h2>Gifting mutual fund units? </h2>Unfortunately, you cant transfer your mutual fund units to your siblings. The transfer of mutual fund units is only possible in case the unitholder passes away. But the one thing you can certainly do is start an SIP, or systematic investment plan (SIP) in their name. With as much as Rs 5,000 per month, invested over a period of 10 years, you 'll have invested Rs 6,00,000 for you siblings, which would have earned returns worth Rs 5,61,695, taking their total corpus to Rs 11,61,695. You can even start an SIP with just Rs 500/month in their name. You can nudge them into continuing this, so that you instill the value of financial discipline and long-term investing in them. Remember, at the end of the day, the true value of your gift lies not just in its monetary worth, but in the knowledge, responsibility, and financial acumen that you will pass on to your siblings. So, this <keyword id="22639140" type="General" weightage="100" keywordseo="Rakshabandhan" source="keywords">Rakshabandhan</keyword>, consider tying not just a rakhi, but also a knot of financial empowerment.

Move over regular gifts! Gift your sister stocks, MF units this Rakhi

Imagine a bustling jewellery market teeming with diamonds and gold. Amidst this glittering chaos, a small stall is trying to sell handcrafted gemstones. Even as newer and shinier outlets keep cropping up, all vying for attention, this gemstone store offers some of the oldest yet valuable jewels at a discount. Though they lack immediate sparkle, these rare gems reveal their value to the discerning buyer. This is how South Korea appears for many experts in global capital markets: a trove of undervalued gems, overshadowed by brighter, more aggressively marketed investment options. This undervaluation, known as the "<keyword id="24399183" type="General" weightage="20" keywordseo="korean-discount" source="keywords">Korean Discount</keyword>," reflects how South Korean companies are priced much lower than their global peers despite robust fundamentals — strong financial performance and consistent profitability. Contributing factors are many, ranging from opaque governance structures to geopolitical risks. But the fact stays, if you are a seasoned conglomerate listed in South Korea, you are likely undervalued. <keyword id="19906087" type="General" weightage="20" keywordseo="hyundai" source="keywords">Hyundai</keyword> Motor India Ltd. (HMIL), a subsidiary of the Korean giant Hyundai Motor Company (HMC), recently sought to escape this valuation trap by listing in India, a market where investor optimism commands premium pricing. But its valuation raised many eyebrows! Now that a month and a half has gone by since its listing, time is apt to examine if this gamble paid off. Will <keyword id="93460" type="General" weightage="100" keywordseo="hyundai-india" source="Orion">Hyundai India</keyword> justify its high valuation? Or does the listing highlight broader questions about the overheated valuation dynamics of Indian markets? A record-breaking <keyword id="19898327" type="General" weightage="20" keywordseo="ipo" source="keywords">IPO</keyword> but questions remain Hyundai Motor India’s mega Initial Public Offering (IPO), launched in October 2024, broke records by raising ₹27,870 crore, making it India’s largest-ever IPO. The offer was oversubscribed by 2.37 times, highlighting robust demand. But many investors remained sceptical: was this IPO an honest attempt to expand Hyundai’s footprint in India or was it trying to offer a way to cashout for existing investors and promoters? Or perhaps, is it an attempt by the Korean chaebol — a large family-owned business conglomerate — to break free from the aforementioned “Korean Discount”? When shares listed on October 22, these concerns seemingly weighed on the minds of most investors and the stock promptly dipped 5% below the issue price on the day. A tepid grey market performance had already foreshadowed this muted debut in the Indian markets. Now, after almost 35 trading sessions on Indian market, the stock remains almost exactly at price it listed on October 22 at Rs 1820—no gain, no loss. <h3>The gamble of hyper-valuation</h3>Much of this hesitation stemmed from Hyundai’s valuation. On listing, Hyundai was valued at $18 billion, positioning it as one of India’s most valuable automotive companies. However, such high valuations often temper investor enthusiasm, resulting in more cautious short-term outcomes. For most investors, the Price-to-Earnings (P/E) ratio is the most preferred parameter to gauge if a company is overvalued or undervalued. With a P/E ratio of 26.3, HMIL was priced significantly above the Indian automotive industry average of 24.4. Globally, automotive companies operate with much lower P/E ratios, reflecting mature market conditions and slower growth trajectories. HMIL’s South Korean parent Hyundai Motor Company (HMC) trades at a meagre 3.07, believe it or not! For Indian investors, the high premium hinted at overvaluation despite Hyundai’s strong domestic position. Such stark difference in valuation obviously sparked debates — is the Indian market assigning a premium to Hyundai Motor India’s growth potential, or is it simply reflecting the general exuberance around the prospects of the Indian economy? Another concern is the allocation of IPO proceeds. Hyundai’s IPO was structured as an offer for sale (OFS), meaning all funds raised would flow to the parent company rather than Hyundai India’s operations. Although Hyundai has committed to investing in R&amp;D for EVs and hybrids, critics argue that the lack of immediate reinvestment in India’s operations reflects a missed opportunity for domestic growth. Despite the early disappointment, Hyundai was confident that the valuation was fair. It did have some factors going for it, in addition to the fact that other auto giants like Mahindra &amp; Mahindra and <keyword id="19909974" type="General" weightage="20" keywordseo="maruti-suzuki" source="keywords">Maruti Suzuki</keyword> command even higher P/E ratios. And looking at the company fundamentals, it does seem like Hyundai is playing a long-term game. <h3>Hyundai in India: A proven track record</h3>Despite the initial stumble, Hyundai India’s long-term story is compelling. Since entering the Indian market in 1996, the automaker has sold over 8 million vehicles and firmly occupies the second spot in the domestic passenger vehicle market, trailing only Maruti Suzuki. Hyundai’s blockbuster SUV offerings, like the Creta and Venue, have been critical in building this dominance. Despite some challenge from Maruti Suzuki Brezza and Tata Punch, Creta has retained the tag of ‘most-selling SUV in India’ successfully so far this year. <div type="image" title="Hyundai" agency="Business Insider India" msid="116156234" hostid="261" caption="&amp;lt;p&amp;gt;Selling over 17,000 units per month on average this year, Creta has edged past major competitors to be the most-selling SUV in India in 2024. As Indian consumers preference continues to shift gradually towards premium products over budget segments, Hyundai stands to benefit (Wikimedia Commons / Canva)&amp;lt;/p&amp;gt;"></div> Selling over 17,000 units per month on average, Creta has edged past major competitors to be the most-selling SUV in India in 2024. As Indian consumers preference continues to shift gradually towards premium products over budget segments, Hyundai stands to benefit (Wikimedia Commons / Canva) Hyundai India’s market share of 14% in October 2024 underscores its clout. The company’s ability to tap into India’s premiumisation trend, where consumers increasingly prefer high-end vehicles, positions it well for growth. With plans to expand in electric vehicles (EVs) and hybrid technology, Hyundai is poised to capitalise on both domestic demand and export opportunities. The company’s ability to capitalize on its strong brand, extensive dealer network, and leadership in segments like SUVs and exports will determine its future performance. Hyundai’s strategic focus on expanding electric vehicle production also aligns with global trends towards sustainability, potentially positioning it as a leader in the segment. By listing in India, Hyundai aims not only to expand its operations but also to make India a global manufacturing and export hub for its products, especially SUVs and EVs. Therefore, despite early setbacks, Hyundai’s gamble seems to have paid off. The stock has rebounded, gaining 5% in the past month. More good news came in this week, as positive projections from Morgan Stanley and JPMorgan forecast an impressive 17-28% upside for the stock over the next year, reflecting growing investor optimism. <h3>A strategic pivot from the Korean Discount?</h3>The Korean Discount has long plagued South Korea’s chaebols, including Hyundai. Experts attribute this to several factors: <ul> <li>Chaebol Governance: South Korea’s conglomerates, known as chaebols, are often criticised for opaque governance structures and excessive family control.</li> <li>Geopolitical Risks: Tensions with North Korea contribute to investor caution, adding a layer of perceived risk.</li> <li>Limited Domestic Liquidity: South Korea’s relatively small investor base can constrain market activity and valuation potential.</li> </ul> By listing in India, Hyundai sought to unlock better valuations for its subsidiary, leveraging the optimism of Indian markets. India’s stock market has a trailing P/E ratio of 24.4, far above South Korea’s Kospi average of 16-17. The Indian market’s appetite for high-growth stories provides a fertile ground for companies like Hyundai to escape the valuation constraints of their home market. A successful IPO could encourage other such conglomerates to follow suit, setting a precedent. While Hyundai India has a robust track record, its future success hinges on navigating key challenges: <ul> <li>Supply Chain Vulnerabilities: Hyundai relies heavily on its Chennai plant, making it vulnerable to disruptions.</li> <li>Intensifying Competition: Domestic rivals like <keyword id="19906967" type="General" weightage="20" keywordseo="tata-motors" source="keywords">Tata Motors</keyword> and MG Motors are making aggressive inroads into the EV market.</li> <li>Policy Risks: The automotive sector’s reliance on government incentives for EVs and hybrids adds a layer of unpredictability.</li> </ul> High valuations come with risks. Hyundai will need to prove that it can sustain its growth trajectory in India, fend off competition from established players like Maruti Suzuki and Tata Motors, and navigate challenges such as supply chain disruptions and regulatory hurdles. If Hyundai successfully capitalises on its strong brand and market leadership, it could not only redefine its value but also serve as a case study for other Korean companies seeking better recognition and valuations in global markets. <h3>Is Hyundai saga a reflection of overheated Indian markets?</h3>The bigger question here is, does Hyundai’s IPO highlights a broader narrative about Indian markets’ premium valuations? With a trailing P/E ratio of 24.4, Nifty 50 index is among the highest in emerging markets. India’s stock markets consistently command a premium due to robust retail participation, strong economic growth prospects, and a burgeoning middle class. While this premium reflects optimism about India’s long-term growth story, it also signals potential risks of overvaluation, particularly in sectors like technology, automotive, and consumer goods. With a record ₹94,017 crore outflow by Foreign Portfolio Investors (FPIs) in October 2024, concerns about overheated valuations are mounting. Sustaining such unprecedented valuations required companies to consistently perform above global averages, and retaining robust earnings growth quarter after quarter remains a challenge in today’s uncertain world. For Hyundai, the high valuation is both an opportunity and a risk. While it underscores investor confidence, it narrows the margin of safety, making the stock vulnerable to corrections during economic downturns. Take for example, the high-profile IPO of Life Insurance Corporation of India (LIC) that raised over ₹21,000 crore. Its listing was met with disappointment as the stock began trading at a 9% discount to its issue price, and subsequent performance has remained subdued. LIC’s post-IPO journey also highlights how inflated valuations can lead to long-term underperformance, as the stock gave only 12% return over the past 30 months when even the Nifty 50 index went up by over 44%. This happens when when the company's growth narrative fails to align with its pricing. Despite being a household name with a dominant market share, LIC's stock has struggled to meet expectations, partly due to concerns about its operating efficiency and the limited use of IPO proceeds for growth initiatives. Make no mistake, Hyundai Motor India’s IPO is a landmark event! It showcases the potential for Korean companies to leverage emerging markets like India for better valuations. It also shows that strong fundamentals can help justify a company such premium valuations even amidst bearish economic prospects. However, it also serves as a cautionary tale about the risks of overvaluation. For Hyundai, the next steps involve proving its long-term growth story, navigating competitive challenges, and maintaining investor confidence. For Indian markets, Hyundai’s IPO underscores the need to balance optimism with realistic expectations as they continue to evolve as global investment hotspots. To sustain the country’s economic narrative as a land of unmatched opportunities, corporate India must work on improving long-term fundamentals and mitigating long-term risks. As global investors watch closely, Hyundai India’s success or failure could shape how international companies view India as a listing destination in the years to come.

Tackling the 'Korean Discount': A deep dive into curious case of Hyundai Motor India's market listing

Over the past few months, there’s been a lot of brouhaha about the lagging pace of bank deposits in India. Simply put, the rate at which Indians are depositing their hard-earned money in banks has been falling constantly, and some blame the increasing financialization of household savings in the country, or the rising preference of Indians towards mutual funds and shares. So, the hypothesis is that people are choosing to invest more in mutual funds and the Indian equity markets through direct investments, IPOs, or NFOs, the money flowing into Indian banks in the form of deposits is slowing down. But is that really the case? <h2>A crisis or a phase?</h2><keyword id="19899808" type="General" weightage="20" keywordseo="rbi" source="keywords">RBI</keyword> data suggested that for the quarter ended June 2024, bank deposits grew at 11.7%. On the other hand, credit growth has outpaced this at 15%. This means that the outflow from banks as loans is far greater than the inflow into them in the form of deposits in Q1 of FY 2024-25. The situation largely saw cut-copy-paste in the first week of September as well, with loans registering a 13.3% YoY growth during the period, while deposits rose only 11.1%. This gap has only been widening for the last 3 years. Since deposits are how banks gather assets to further lend and earn interest income as a consequence, even a slight dip could set the alarm bells ringing for banks, and rightfully so. And truth be told, mutual funds are indeed taking on bank deposits in a big way. Per a report by <keyword id="20250971" type="General" weightage="20" keywordseo="franklin-templeton" source="keywords">Franklin Templeton</keyword>, in August 2024, the AUM (assets under management) of Indian mutual funds, or the total funds managed by them, stood at 31.3% of total bank deposits in the country, up from 24.20% during the year-ago period. As of August 2024, the AUM of mutual funds stood at Rs 66.17 lakh crore, an all-time high. But all said and done, is this really the reason why the rate of bank deposits is falling behind? SBI has dismissed this to be a “statistical myth”, and experts point out that since equity and fund houses also keep the cash in their respective bank accounts, there’s no cause for concern. So, is financialization really to be blamed for the trailing tempo of deposits? Or is something else happening behind the scenes? We take a closer look: <h2>First, are <keyword id="4000333" type="General" weightage="100" keywordseo="household-deposits" source="Orion">household deposits</keyword> really slowing down? And is that a cause of concern?</h2>Data from Motilal Oswal suggests the contrary. Deposits grew by around 10.4% between March 2020 and August 2024. Data from RBI also highlights that as of August 9, 2024, bank deposits witnessed a YoY growth of 10.8%. The loan-to-deposit ratio for the retail segment, which indicates what percentage of its total deposits the banks lend out as loans, has stayed at 77.5%, above the 77% mark for the tenth straight month. Also, we can’t forego the fact that the share of Indian <keyword id="20319599" type="General" weightage="20" keywordseo="households" source="keywords">households</keyword> in bank deposits has indeed slowed down. However, data from Axis AMC shows that the dip is marginal—from 63% in 2022 to 62% in 2023 and 61% in 2024. What has slowed down even more considerably is the share of government deposits in the aggregate bank deposits, which has dipped from 14% in 2018 to 9% in 2024. So, it's not just household deposits, you see. Moreover, as of March 2024, the collective CASA ratio (current and savings account deposits) of all commercial banks in India stood at 41.00%, down from 43.1% in March 2023 and 45.2% in March 2022, marking a nearly 5% point decline over the past year, while still staying over the 10-year average of 39.2%. This implies that Indian banks are relying more on higher-cost funds (savings accounts), which can limit their profitability. <h2>What is this financialisation of savings we are talking about?</h2>Then again, there is no doubt about the growing affinity of Indians towards mutual funds and stock markets. Recent data from CBDT (<keyword id="19942037" type="General" weightage="20" keywordseo="central-board-of-direct-taxes" source="keywords">Central Board of Direct Taxes</keyword>) highlights that India’s net direct tax collection surged by around 22%, driven exclusively by the significant uptick in the collection of <keyword id="20930760" type="General" weightage="20" keywordseo="securities-transaction-tax" source="keywords">Securities Transaction Tax</keyword> (STT), which doubled to Rs 26,154 crore, from Rs 13,352 crore in the year-ago period. Why does this matter? STT is levied when you buy or sell equity shares on stock exchanges, sell equity mutual funds, and trade in futures and options in the equity segment. Such taxes, including the multiple other taxes in equity market investments, are considered as leakages as the money moves out of the economy into government coffers. Data from a ValueQuest report explains that over the last 20 years, the markets have handsomely rewarded the investors, generating over $900 billion in incremental value for them. This is the major driver behind the dramatic rise in investment flowing towards the equity markets. There’s further proof of this budding romance, if you check the demat pudding. The number of demat accounts, which are a primary requisite for participating in the stock markets, also burgeoned by 42.3 lakh in August 2024, taking India’s total tally of demat accounts beyond 17 crore. To put this in perspective, this is almost equivalent to the population of just 8 nations in the world, including China, the US, Brazil and more. Vivek Iyer, Partner, Grant Thornton Bharat thinks it's rather important, as well. “Financialisation of household savings in India is an indication of deepening capital markets in the market, especially from a retail investor standpoint. Bank deposits with a modest rate of return are no longer the only option for savings for investors. Investors today have more avenues for wealth creation in the form of public capital markets, which have democratized wealth creation and provided equality of opportunity to retail investors”, he says. Yes, Indians are investing more and more in the markets, and in mutual funds. But is it a sin to look out for inflation-beating returns, which the stock markets offer, and vanilla bank deposits don't? After all, the allure of 12-13% annual returns offered by equities can certainly pale the stability offered by good old deposits, which generally do not go beyond 9% when it comes to annual returns. But all of this is not what is behind the slowdown. India is still a toddler in the school of savings financialization, with less than 10% of the population holding a demat account, and less than 5% of us saving in equities. That's a drop in the ocean of deposits, far inadequate to trigger a tsunami. <h2>Tell me why lagging deposits have nothing to do with Indians investing more in mutual funds!</h2>Says Shweta Rajani, Head - Mutual Funds, Anand Rathi Wealth Limited, “Households' equity holdings composition grew from 11.1% in FY 23 to 14.7% in FY 24. This trend reflects a growing awareness of investment options, empowering individuals to take control of their financial futures. Despite this transition towards equities, banks still hold a significant share of household financial savings—33.5% in FY24 compared to 34.9% in FY23”. Also, household savings and their subsequent financialization do not have much to do with deposit creation, which is entirely made by banks. What actually drives increased deposits is credit growth or increased lending. When interest rates are eased, people tend to borrow more and spend more, which circulates more money in the economy. For the past 4 years, RBI has been tightening the screws on interest rates, which raises the cost of borrowings, and makes it more expensive to take loans, putting a dampener on credit growth, but effectively curbing inflationary pressures. The last time RBI cut the repo rate by 40 basis points was back in May 2020, 4 years ago. The lag in deposit growth we’re witnessing is almost 3 years old. Coincidence much, or just good old economics at work? But with the <keyword id="19900043" type="General" weightage="20" keywordseo="fed" source="keywords">Fed</keyword> recently setting a rate cut precedent by slashing 50 bps off its interest rate, RBI is expected to follow suit in the next <keyword id="19918491" type="General" weightage="20" keywordseo="mpc" source="keywords">MPC</keyword> (Monetary Policy Committee) meeting, scheduled for November 2024. A rate cut would ease the aforementioned high cost of borrowing, and increase loan-taking for corporates and institutional investors, thereby stoking consumption in the economy. And then, deposit creation in banks is likely to return to its former glory. If not, then that would be a curious case to unravel! But that worry is for another day.

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Move over regular gifts! Gift your sister stocks, MF units this Rakhi

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