India’s biggest investor Rakesh Jhunjhunwala says this about the current stock market conditions

The share of retail investors' money in the equity market in India is only going to increase in coming days, according to Rakesh Jhunjhunwala of Rate Enterprises.

He stressed the fact that retail money in savings is huge, but the flow of savings to the market is very low, adding the trend is reversing and the share of money in equities is growing every year.

Further, a joint report by EY and Cafemutual highlighted that there lies a significant opportunity to channel household savings, which stands at Rs 11.7 lakh crore, into capital markets.

Total assets under management or AUM of the mutual fund industry is expected to cross the Rs 20 lakh crore mark by 2018 from the existing Rs 12 lakh crore, according to a report.

"With such huge financial savings, only a very small part of the savings is coming into equity and this is said to be going up. It has gone up in the last one year,"" Jhunjhunwala said.

The mutual fund industry is in a sweet spot with all the enabling ingredients in place. Strong fundamentals of the economy helped cushion the Indian financial markets (including MFs) against the global financial crisis.

Since 2008, the AUM of the Indian mutual fund industry has grown at a CAGR of 16.84%, outpacing the global average of approximately 8.8% in the same period.

Jhunjhunwala said it is difficult to predict how much, but a large part of the household financial savings is set to enter equity markets in the near future via the mutual fund route.

Volatility is set to rise in the next 2-3 years because of global headwinds, and it will be difficult for mutual funds to replicate returns recorded in the last couple of years. However, for investors who wish to enter equity markets, MFs provide a safe haven, and organized approach to investing.

Harsha Upadhyaya, CIO of Kotak Mutual Fund, is of the view that all those investors who cannot put full time into stock markets, it is better to come through the mutual fund route where there is a professional fund management team for handling these issues.

Upadhyaya added that for all those investors who cannot really analyze companies and invest in stocks, mutual fund is definitely a good route because there is diversification in portfolios and that also reduces volatility of returns.

(Image: Indiatimes)