Bharat Salokhe, Director Akshay Profit & Wealth Pvt. Ltd.
It was written last week that uncertainty in the market will increase as the date of Lok Sabha election results approaches. A look at last week's market picture should confirm this. Trading takes place four days a week, with Wednesday being a holiday on May 1. Out of that two days the market closed in red zone and two days in green zone. Even so, Nifty tried to hit the strong fortification of 22800 twice. But both times he failed. Nifty, however, established two highs of 22783.35 on 30th April and 22793.90 on 3rd May. Nifty is keen to cross the 23000 mark and start its journey towards 25000. Sensex has already crossed the quarter lakh mark.
Uncertainty over Lok Sabha election results, Q4 financial results of companies and increased Margin Funding in the market were the three reasons behind Friday's market crash.
The central government of any country determines the country's fiscal policy and taxation system. Further the financial performance of corporate companies depends on it; But now behind the increased volatility in the market, especially towards the end of the week i.e. on Friday which is massive in the market. Sell-off happens. It is becoming clear that Margin Funding is responsible for it. Let's talk about it briefly.
What is Margin Trading Funding (MTF)?
So it is a loan facility available to investors, especially traders, which they get from their brokers. There is no need to open any separate account, this facility is available in the same demat and trading account you have. This is Margin Funding for buying shares. Traders can buy as many shares as they want with a small margin amount. Of course, SEBI publishes the list of which shares to fund. The business relationship between the broker and the customer determines the duration of the funding and the interest rate.
This is the brief information about Margin Trading Funding. How Volatility Increases in the Market Due to Take Now (MTF) So the shares bought using (MTF) have to be square-effed after certain days (preferably after 5 days or on the last day of the market on Friday). How much should this increase the MTF ratio? While at the end of March 2020, the MTF figure was Rs. 7100 crore and the same figure by the end of March 2024 to Rs. 57101 Crores.
More than 7 times growth in just four years!
If there is uncertainty in the market during elections or due to some other reasons, then multi-asset funds can be a very good option for investment. These funds invest in all three asset classes namely Equity, Debt and Commodities. The fund managers of these funds are well versed in all sectors. By studying the market conditions and economic indicators, they determine the amount of investment. So investing in Mutti Asset Funds is always a strategic move. Seeing the performance of these funds and their growing popularity, many asset management companies have launched their funds.
Maharashtra Day was celebrated last week on Wednesday 1st May. According to Amfi (Association of mutual Funds in India) data, the mutual fund business as at the end of March 2024 is as follows
Total Net Assets – Rs. 55,00,728 Cr.
Total SIP AUM – Rs 10, 71, 666 Cr.
Maharashtra Day is mentioned above. We have always been proud of Maharashtra as an advanced nation in all respects. Now check the statistics of the top seven states in India for investing in mutual funds in India above:
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