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Understanding Liquidity and its Impact on Investment Decisions
Liquidity is crucial in the market, but it can be hard to grasp its importance in our day-to-day lives. Judging liquidity in the Indian stock market involves analyzing monthly investor flows. Currently, domestic investors are leading the way in India's bull market, with monthly investments in domestic equity mutual funds skyrocketing. This surge in financialization of savings is a result of transitioning to a middle-income per capita country. As India's GDP grows, so does the trend of financialization. As a result, quality stocks in India tend to avoid significant corrections due to the constant influx of domestic money.