In the stock market, the law of demand works in reverse. Higher the price, higher is the demand. This year as the stock market climbed to a record high, one would think investors would have flocked to equities like there was no tomorrow. But no, that was not quite the case.

Domestic mutual funds did end CY20 on a record high with equity assets under management (AUM) touching a new peak of Rs.9.5 trillion. But much of the rise in assets came because of rising market value and not because investors chose to keep the faith. Sales of equity schemes rose 2% to Rs.2.32 trillion, compared with the previous year. Redemptions were Rs.2.26 trillion (up 49%) during the pandemic-struck year. In other words, inflows (net of redemption) into equity funds hit a seven-year low at Rs.64 billion (See: Bailing out).