Geojit's Vinod Nair expects the inflow of domestic fund to increase the small-cap and mid-cap stocks-here is why | Einsmark news

Domestic Institutional Investors (DIIs), led by mutual funds, emerged as a key power of power for the Indian stock market. YTD, DIIs applied more than net £ 3.5 lakh crore, while FIIs sellers are £ 85,000. Since May, there has been a major increase in the DII tract, as the domestic economy has begun to fall back, with an increase in the results of corporate earnings in the Q4. Meanwhile, the strength of retail investors, whose role has expanded in the stock market since 2020, has moderated during the year. The slowdown is after being an important investor in the calendar year of 2024. Based on NSE data, they made up about ~ 20% of the total net inflow in India. They have been in a profit discussion mode since March and still do so by mid -month, June. The primary driver behind the recent wave of profit discussion among investors in that CY2025 has increased the volatility of the market. Mid and small capital are underway due to the rapid downgrade of domestic earnings in FY25. Due to an above liquidity inflow in CY2024, which is believed to be about a total net inflow of £ 7 lakh crore of FIIs, DIIs and retail, the premium valuation of Tier 2 shares has violated the historical tendency. This overlay led to a broad market correction at the earnings downgrade, which led to losses for newer investors and the confidence of the retailer. Therefore, the retail investors today are in reviewing their share portfolio, as indicated by maintaining the large amount of gross total turnover and volatility in the stock exchange. The retail players still play for the long-term investment with the care of the high monthly SIP inflow. In the last part of June, there was a visible increase in retail investment activity in particular, which was a recovery in sentiment after almost three months of subdued involvement. We can expect the traction of these and retail to continue as world voltage has diminished, a key feature observed by retail investors. This optimism is further enhanced by the supportive financial attitude of the Reserve Bank of India and the fiscal initiatives of the government, which positively influences the real economy. The 2026 fiscal year result in the first quarter will soon be announced within the next 2 weeks, which have high expectations. The environment is optimistic that it can lead to an upgrade in future earnings. The improved domestic inflow is expected to increase the drug and small cap. Nifty 50, which has been trading in a narrow band from 24,500 to 25,250 for the past 1 ½ months, has crossed more than 25,500, an important basis. It is led by a reduction in world risk and in anticipation of improving in the FY26 earnings and finalizing a bilateral trade agreement with the US, the traction of the broad market can expand in the future if earnings indicate positivity. Although the market has violated a new zone, the momentum of the broad market is still muted compared to last year’s parameters. Like the percentage of stocks that traded more than the 200-day moving average, it was as high as more than 80% in September 2024, which is only 55% today, based on Nifty 500 index data. An indication that the market can attract more traction. The author, Vinod Nair, is head of research at Geojit Financial Services. Disclaimer: The views and recommendations above are those of individual analysts or brokerage companies, and not of currency. We advise investors to check with certified experts before making investment decisions.