How Domestic Investors’ Inflows Shield Markets From Steep Falls? Jefferies India’s Take

Mahesh Nandurkar, Head of Research & MD at Jefferies India, explains how domestic inflows have been a significant stabilising factor for the Indian markets. According to him, Over the past 12 to 18 months, these strong inflows have prevented market corrections greater than 5%, thanks to contributions from mutual funds, single-stock purchases, insurance, and pension funds. He highlights that In 2024, domestic inflows have averaged around $8 billion per month, which amounts to more than $90 billion annually—an impressive figure that represents over 25% of household financial savings. Mahesh Nandurkar notes that while domestic inflows are expected to continue supporting the market, their sustainability at such high levels is a concern. He suggests a more reasonable figure might be around $4 to $5 billion per month in the long run. Additionally, the robust demand for equity has triggered a sharp increase in supply, with numerous IPOs, QIPs, and block deals entering the market. Although current domestic inflows have absorbed this supply, Mahesh Nandurkar warns that continued high supply could cap near-term market returns, which may eventually lead to a decline in domestic inflows. He advises caution in the next 3 to 6 months as market dynamics could shift due to these factors.