The Mutual Fund Stress Test

The upcoming mutual fund inflow numbers for March 2024, expected in the second week of April, might show an interesting picture. This is because a few weeks ago, Madhabi Puri Buch, the chairperson of Sebi, expressed concerns about the high valuations of small and Mid-Cap stocks that many retail investors like. In response, the Association of Mutual Funds in India (AMFI) instructed mutual funds to do stress tests. These tests will check how quickly Small-Cap and mid-cap funds can sell 25 per cent and 50 per cent of their investments. The results will be shared on the funds' and AMFI's websites every 15 days, starting from March 15.