Retail Investor Strength
Retail investors are acting as a strong buffer against the outflow of funds from FIIs. Sanjay Shah, CMD of Prudent Corporate, noted that retail confidence
is holding firm. He attributes this to consistent returns from SIPs and a decrease in alternative investment options. This trend is supporting market stability amidst broader consolidation. Shah stated that Prudent Corporate's SIP book grew from ₹980 crore at the beginning of 2025 to ₹1,100 crore. This mirrors the industry-wide rise in SIP inflows, which now reach ₹29,000 crore monthly. He highlighted that despite modest market returns, rupee-cost averaging has delivered 7–10% gains for SIP investors, maintaining their confidence.
SIP Inflows Continue
A significant portion of SIP inflows continues to support small and midcap funds. While new lump-sum flows are increasingly directed towards hybrid funds, multi-asset allocations, and large & midcap schemes, nearly one-third of SIP inflows at Prudent are still going into small and midcap funds. Shah emphasized that SIP-led inflows into these segments are steady and strategically long-term in nature. This sustained investment pattern in smaller companies is crucial for their growth and contributes to the overall stability of the market.
NFOs Attract Investments
The mobilization of funds through new fund offerings is also playing a significant role. Shah reported strong traction in NFO mobilizations as new Asset Management Companies (AMCs) launch products to fill their fund ranges. Approximately 18–20% of Prudent’s monthly new mobilization of ₹1,000 crore currently comes from NFOs. This suggests that investors are keen on exploring new investment avenues. Furthermore, the market is seeing an influx of fresh capital as new AMCs enter, creating wider options for investors and spurring the growth of the financial ecosystem.
SEBI's Incentive Impact
SEBI’s upcoming incentive structure is expected to boost retail participation. Shah anticipates a sharp rise in new investor additions from February 1, 2026. This is when SEBI’s incentive plan comes into effect, providing ₹2,000 per new investor from B30 cities and women investors. This initiative is designed to broaden market participation and encourage investment from a wider segment of the population. Shah anticipates the measures will boost retail involvement significantly over the next year.
Industry Yields Stable
Prudent's earnings are expected to remain relatively stable. Shah said Prudent currently earns 90.5 basis points, and anticipates a minor decrease of 0.5 basis points over the next year, unless substantial changes occur in SEBI's upcoming board meeting on December 17. The meeting will review the regulator’s consultation paper on TER revisions. This suggests the industry is cautiously optimistic about maintaining its financial health, barring potential adjustments influenced by regulatory decisions.
IPO Market Impact
The IPO market's health is benefiting the industry, not hurting it, according to Shah. He noted that as promoters sell stakes through OFS and raise liquidity, that money frequently re-enters capital markets. Meanwhile, domestic mutual funds are the main subscribers to new IPOs, driven by strong retail flows. Contrary to concerns that the IPO market could siphon off liquidity, Shah believes it is actually helping the industry. This is due to capital being reinvested from OFS and the significant retail participation.
