Domestic fund flows to stock markets could potentially double in the financial year 2018-19 to USD 55 billion, from USD 28 billion recorded last fiscal, says a Citigroup report.
Domestic flows into the mutual fund sector have been increasing in the recent months and demonetisation has added to this trend.
According to the global financial services major, rising domestic flows in MFs suggest the channelising of household savings in the form of cash towards financial assets.
"If trend of improving household financial savings continues, domestic flows to stock markets could potentially increase to USD 55 billion in FY18-FY19 period vs USD 28 billion in FY16-FY17," Citigroup said in a research note.
Moreover, liquidity surplus in the banking system has also improved.
"Slower pace of re-monetisation has kept the banking system in surplus to the tune of Rs 6 trillion as opposed to RBI's neutral liquidity stance and banking system could remain in surplus in the entire first half of next fiscal," it added.
According to the Securities and Exchange Board of India (Sebi), Mutual fund managers had invested a net sum of Rs 2,040 crore in February. In January there was an inflow of Rs 5,234 crore, In December, 2016 (Rs 9,179 crore) and in November 2016 (Rs 13,775 crore).
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