Markets Gain For Second Day On Israel-Iran Truce
The tariff threat is looming even as we have been following the news of the war
On Episode 616 of The Core Report, financial journalist Govindraj Ethiraj talks to Vikas Jain, Co-founder and Chief Investment Officer at Multipl.
SHOW NOTES
(00:00) Stories of the Day
(00:50) Markets gain for second day on Israel-Iran truce
(01:45) Oil prices stay down
(02:54) How mutual investors are diversifying their holdings on the back of record SIPs
(14:11) One in four Indians say they use only mobile phones to consume media content
NOTE: This transcript contains the host's monologue and includes interview transcripts by a machine. Human eyes have gone through the script but there might still be errors in some of the text, so please refer to the audio in case you need to clarify any part. If you want to get in touch regarding any feedback, you can drop us a message on [email protected].
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Good morning, it's Thursday, the 26th of June, and this is Govindraj Ethiraj broadcasting and streaming weekdays, usually from Mumbai, India's financial capital, but in transit right now.
Our top stories and themes in a somewhat shorter edition of the Core Report.
The stock markets gained for a second day on the Israel-Iran truce.
Oil prices stayed down.
How mutual fund investors are diversifying their holdings on the back of record systematic investment plans or regular investments.
One in four Indians say they only use mobile phones to consume media content.
The Markets Are Staying Another Day
Well, before we come to the markets, remember there is a tariff threat that's looming, even as we've been following the news of the war and the latest news of a ceasefire between Iran and Israel, which obviously boosted markets. But remember the tariff agenda is at this point unfinished.
Trump is up against a self-imposed 4th of July target to pass his tax and spending bill, and he's two weeks out from the July 9th expiration of the global tariff pause that hit the economy in April when he first introduced a raft of levies, according to Bloomberg. Back home, domestic markets held their gains for a second straight session. Reliance Industries led the charge on a day that saw the Sensex closing 700 points up at 82,755, and the Nifty 50 was up 200 points to 25,244.
The broader markets were also strong. The Nifty mid-cap and the Nifty small-cap indices were up 0.4% and 1.5% each. Oil prices are now just under $68 a barrel.
The rupee fell though on Wednesday, a day after posting the best session of the year. The currency closed 12 paise lower at 86 rupees 9 paise after closing at 85 rupees 97 paise against the dollar the previous day, according to Bloomberg. On Tuesday, May 23rd, the rupee had posted its best one-day gains since May 23rd.
Speaking of currencies, the British pound, if you've been following it at all, is hovering at its highest level in more than three years and was trading around the $1.36 mark on Wednesday. So far this year, the pound has gone up 8.7% against the US dollar, according to figures from CNBC. Meanwhile, gold is giving up some of its safe haven appeal with the truce agreement between Israel and Iran.
It steadied on Wednesday after falling in the previous session, thanks to that improved risk appetite, and attention is now shifting to upcoming US economic data. Spot gold was not much changed at $3,325 per ounce on Wednesday. On Tuesday, gold prices had hit their lowest in over two weeks.
Sustained Mutual Fund Investments
So there are a few reasons behind the market's overall steady behaviour. Some are obviously macroeconomic, as we've discussed on the show, but some are more microeconomic and have to do with domestic flows as well.
While spikes have come, including most recently because of foreign institutional investors buying actively, the floor or the high base in many ways is thanks to domestic investors, including mutual fund investors. Last month saw a record 26,688 crore rupees invested in systematic investment plans or SIPs of mutual funds. That's almost 27,000 crore rupees.
Moreover, that monthly figure was higher than the 20,000 crore mark for a 10th consecutive month and is now touching about 85 million accounts. So the mutual fund industry's assets under management is about 72 lakh crore rupees, which is up from about 70 lakh crore rupees in April. This also has to be seen in another context, which is where investments are going from Indian households.
So the share of mutual fund assets under management, primarily in equity schemes, is now 31% or more than 30% of bank deposits from around 13% 10 years ago. Now this is of course good in a way because it shows that investors are diversifying and expanding their risk profile. But I guess there is also a concern if investors put too much money in only equities.
Investors are also spreading their wings, speaking of categories like hybrid, arbitrage, equity savings, and balanced advantage as we will shortly find out, which also suggests that many investors are fairly proactive even in the mutual fund ecosystem. I reached out to Vikas Jain, co-founder and chief investment officer of Multipl, a sebi-registered fintech platform that directs investors towards mutual funds. And I began by asking him how he was seeing the latest trends and his outlook.
INTERVIEW TRANSCRIPT
Vikas Jain: So in terms of the flows, what we are noticing is there has been definitely a shift, not just in terms of a decline in the net inflows, but also in terms of the categories, right, where the flows are moving and how, you know, different categories are behaving. Also, I'll share a bit later about how it has been on our platform, but firstly, generally about the industry, the valuations were certainly a concern, especially in certain segments like small and mid-cap. A shakeout was necessary, so which is in a way good, because it helps sustain the longer-term trend, and what has happened is the inflows have fallen more sharply for smaller and mid-cap segments, and I mean, of course, the overall inflows have gone down, but the impact has been much less when you look at categories like multi-cap or flexi-cap or multi-asset, because the risk is kind of diversified there across segments, rather than a specific segment which is overvalued or overheated, and that is what I has been reflected in terms of the flows movement as well.
Also, in terms of hybrid funds, slowly the hybrid funds are picking up, which again, I think is a good thing, because at current rich market valuations, it is good for people to be invested in funds which are less volatile, which helps them sustain their journey through this mutual fund inflows which are coming in to achieve their goals. Also, one major shift, I would say, has happened is the SIP flows, they have remained strong, and there is a major behaviour change, not just in the recent times, but which has been happening over the years, wherein people who are invested in SIPs are not really seeing a red in their portfolio. There is a decline for sure, based on market movements and the recent choppiness, but over a longer term, because they've been investing continuously over a period of time, they have not seen a red in their portfolio.
Maybe it's just a decrease from the values they saw earlier, but at least not a red in terms of a drawdown of capital. Because if you look at it, in terms of the historical experience of retail investors, whether it was, say, the 2007-2008 boom before the global financial crisis, or later boom periods also in the early part of the last decade, retail would come in at the peak, invest in lump sum, then after a few months, see a drawdown of 20%, 30%, 40%, and then think that, okay, this is just a speculative market, and move out.
But today, when they're investing in SIPs, because of the average behaviour of the SIP, which by nature, by default, SIP will give average returns over the cycle, people are not seeing that kind of a sharp drawdown in their capital, and also not a red in terms of their portfolio, because they've been investing over a period of time. Yes, some investors who would have started investing in, say, September, October of last year at peak, and especially in segments like small or mid-cap, they might be and they might be moving out, but a large part of them are not. And that is why we are seeing that SIP flows, while they went down marginally for a couple of months, again, in May, we saw record inflows, which we believe will continue.
Now, coming to the behaviour on our platform, our platform, we call it spendvesting, multiple is all about spendvesting, wherein people invest for their spends. Of course, they can save for their needs, wants, and long-term savings as well. But the primary hope for multiple is that people come in, save for their aspirational goals, like jewellery, gadgets, vacation, shopping, etc.
And here we have been very careful over the last couple of years in terms of giving allocation only to safer funds, especially if the goal horizon is less than one year, we have been giving only debt funds, especially liquid or maybe ultra-short or at the most low duration, depending on the time horizon of the goal. And therefore, we haven't really seen any impact in terms of outflows or drawdown in terms of the SIP flows. Of course, some people had their long-term goals as well as multiple and there was some panic, but we were able to counsel them and guide them that this is something you are saving for the next 5 years, 10 years, 15 years.
And you don't need to panic with these volatile moments because that is part and parcel of the equity investment. And we have been able to kind of stem the flows. We only see SIPs increasing, especially people have started moving to SIPs even for their shorter-term goals, because bank savings rates are now 2.5%, 2.75%. As you saw recently, SBI cut it to 2.5%. Even in FD or RD, if you are doing it for 3 to 6 months, the interest rates are pretty low, just about 3 to 5%. So we are seeing that the younger generation especially is wanting to move to an asset class or an investment where they can get higher returns than the bank, and which is where mutual funds like liquid or ultra-short or even hybrid considering the horizon, if it's a 2 to 3-year goal horizon, maybe a hybrid fund also. So we are seeing the moment, the shift, especially in the younger generation who are moving towards these alternative options for savings bank account. And they also want to invest in equities for the long term.
So the awareness definitely is increasing and that is something that will help the flows continue with some minor hiccups at the most, especially for SIP. Lumsum, yes, there could be some panic withdrawals, but again, as people see that market stabilised, they would come back in.
Govindraj Ethiraj: Right. So quick question here, when you see investors staying on in the market, particularly mutual funds via SIP, so how much would you say is because of inertia? And how much because they have strategically decided to stay on for the long term, which is what the whole proposition is?
Vikas Jain: See, definitely some bit of it would be inertia. I don't deny that because that is the same in case of savings bank, right? That's why people don't move money from savings bank.
But some bit of inertia might be there. But a large part of understanding is also there. And people, in fact, some of them are also stepping up SIPs, right?
Thinking that, OK, valuations are lower today, why not capitalise on it and step up the SIP? So there is some active movement as well. It is not just inertia when it comes to the SIPs, because people actively track, unlike a savings bank account where you don't maybe check the balance once in a while, but you're not really tracking the return on it.
But when it comes to mutual funds, people are actually tracking returns. Even if it is a debt fund or a hybrid fund, people are tracking returns. So there would be active movement either ways.
Even holding on is an active decision, right? And that is reflected in the data also. So if you look at the AMFI data, people holding that mutual funds for more than a year, the percentage has been gradually increasing.
And people holding it for more than five years, that also has almost doubled in the last four, five years. Like earlier, it was, I think, some single digits, five, six percent people were holding it for more than five years. And today it is, I think, about 15 percent or something.
So definitely there is a shift in terms of not just inertia, but people actually realising the value over time. Again, the huge shift has been because of the SIP rather than lump sum, which was being done earlier. Because in SIP, you don't get that jhoor ka chhatka, which you used to get in lump sum.
You don't get that in SIP, right? Where you suddenly see a 30, 40 percent capital drawdown. You don't see that because it is already averaging out over time.
Govindraj Ethiraj: Right. You know, so you've been an equity research analyst, I'm assuming, facing institutional investors. You used to work for Goldman Sachs.
So today, if you look at the behaviour of, let's say, retail investors versus the kind you used to deal with in your last job, I know it was a while ago, but how far do you think today's retail investor class is from, let's say, more longer term institutional investors? I'm not saying everyone has to go there, but what's the gap like in India today versus maybe other markets? And where does it need to go in your sense?
Vikas Jain: Certainly there is a huge gap and a lot of education is required. And that is where, you know, not just us, but also regulator and media have a role to play. Because unfortunately, India, especially the retail market, has been a very product and sales orientated market.
Unlike, you know, advice or solution orientated market, which we see in some of the developed countries. That clearly reflects in the behaviour also, right? Because most of the mutual fund distributors are distributing only equity products, even when it comes to mutual funds.
And the commissions are the drive, what is being distributed. That is why retail has almost 88% of the investment in equity and just about 12% in debt. Unlike institutional investors in India, where you will see the mix is more balanced.
In fact, there is a good balance of debt and equity when it comes to institutional investment in India. But the same does not reflect in retail, because a large part of the debt portion is lying in efficient instruments like savings, buying power, RRDs. When it comes to equity also, the behaviour is definitely changing, but still it is a long way to go.
Because the funny thing is in India, people invest in FD for 20 years, nobody makes a 20 year FD, but they make a one year FD and keep rolling it over for 20 years. And in equity, they want to invest for six months and double the money. But that behaviour is changing because of SIP, fortunately.
So the behaviour shift is happening, it is slow, it has to accelerate. And I think it will because the younger generation has greater access to information, or at least they are more tech savvy, they are more willing to find out more about things from different sources. So the shift is happening, it's a bit slow, I would have wanted it to be much faster.
But it is happening for sure.
Govindraj Ethiraj: Right. Thank you so much for joining me, Vikas.
Vikas Jain: No problem. Thanks a lot. Good talking to you.
The Phone is the TV
Nearly one in four Indians have said in a survey they use only mobile phones to consume media content. One reason is that television sets are unaffordable for many. And the number of users who use digital channels only has now risen to 23% in the March quarter of 2025, according to a Bloomberg report quoting market research firm Kantar Media's Compass report this week, which surveys about 87,000 Indians.
Now that 23% has to be contrasted with the 15% of people only using digital channels in 2023 or just two years ago. A Kantar Insight division official said that the trend is skewed towards lower-income groups and rural users, particularly men, but many people are now consuming digital content on mobile phones or media docs, as television sets and multiple OTT subscriptions are costly.
India's Back In Space
India's Subhanshu Shukla shot into space with three other crew members to the International Space Station as part of a commercial mission by Axiom Space on Wednesday, 41 years after astronaut Rakesh Sharma's space flight. The other crew included NASA retiree-turned-private astronaut Peggy Whitson, who was launched on the fifth flight to orbit of her career, and crew from Poland and Hungary. The crew lifted off from NASA's Kennedy Space Centre in Cape Canaveral, Florida at about 2.30 a.m. Eastern Time on Wednesday, beginning the latest mission organised by Axiom Space in partnership with Elon Musk's rocket venture SpaceX, according to Reuters.
Axiom 4's autonomously-operated Crew Dragon was expected to reach the ISS after a flight of about 28 hours, and then it would dock with the outpost in an orbit about 250 miles, or 400 kilometres, above Earth. The astronauts are expected to spend about 14 days aboard the space station conducting microgravity research. The Axiom 4 participation by Shukla, who's also an Indian Air Force pilot, is seen by India's own space programme as a kind of precursor to the debut crewed mission of its Gaganyaan orbital spacecraft planned for 2027, says Reuters.
