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Work from anywhere (WFA) has had an "unintended consequence"- the return of the retail investor investing directly in the markets, side stepping mutual funds.

According to the Annual Equity Market outlook 2021 - by Anoop Bhaskar, Head - Equity, IDFC AMC in the US, this phenomenon is most closely associated with an app-based trading platform, which has caught the imagination of the retail trader, especially millennials.

Facilitating investment through an app, it focused exclusively on retail investors, encouraging them to trade rather than be long term investors - allowing them to buy fractional shares etc.

"WFA (work from anywhere), it seems has had an "unintended consequence"- the return of the retail investor investing directly in the markets, side stepping mutual funds as the preferred vehicle for their equity investment", the note said.

The report said India, too, has witnessed a surge in retail investing through online brokerages. It would not be out of place to admit, that during the dark days of March 2020, retail investors who dived into the market to "bottom fish", while most institutional investors focused on career mitigation, raising cash, the year end results favour the former.

"With large caps delivering 60% plus returns, Small Cap Index registering a gain of 100% from its March lows, the pickings for this segment of intrepid investors has far exceeded what institutional investors have delivered", the report said.

The report says that market moves may be shorter, sharper - deeper on the way down and overshoot on the way up, than the docile 1990s. In short, more vicious. The fall during March lasted less than 35 trading days, erasing between 36-43% across the indices - Large, Mid and Small Caps.

Clearly, the markets are primed for a strong revival in earnings, after a dismal FY20. The trajectory of this growth will clearly have the closest correlation to market levels. The delivery of promise, on this front, will be the most critical factor which will influence the markets, as valuations boosted by the benign monetary and fiscal policies are at an elevated level, the report said.

Earnings growth has been robust only in a handful of sectors like retail banks and consumer discretionary. Growth has been steady in sectors like Staples, IT Services, etc.

Large majority of sectors have seen earnings deterioration due to headwinds, resulting in a decade of lost earnings growth With the spread of the pandemic and the lockdown during Q1 FY21, earnings for the year FY21 were sharply downgraded, the report said.