 "MFs' investment in equities sees longest spell in 15 years")
Domestic mutual funds (MFs) have reported a record monthly net inflow of over Rs 10,000 crore into equities during June, even though the foreign institutional investors (FIIs) remained on the side-lines.
According to data available with the Securities and Exchange Board of India (Sebi), MFs pumped in Rs 10,320 crore in June 2015, which was the highest fund infusion by them in single month. On a quarterly basis, the net inflow of Rs 23,741 crore in April – June 2015 quarter made by mutual funds was also the highest since data available with the market regulator since January 2000.
This is for the 14th month in row, domestic mutual funds have invested in equities—the longest spell of net mutual fund inflows into the stock market in at least 15 years. Since May 2014, they made a net investment of Rs 66,453 crore in Indian equities, data suggests.
According to data available with the Securities and Exchange Board of India (Sebi), MFs pumped in Rs 10,320 crore in June 2015, which was the highest fund infusion by them in single month. On a quarterly basis, the net inflow of Rs 23,741 crore in April – June 2015 quarter made by mutual funds was also the highest since data available with the market regulator since January 2000.
This is for the 14th month in row, domestic mutual funds have invested in equities—the longest spell of net mutual fund inflows into the stock market in at least 15 years. Since May 2014, they made a net investment of Rs 66,453 crore in Indian equities, data suggests.
“I believe such trends take time to build/come in and take some time to go off as well. My assumption is that unless the markets get very bad and volatile for few months at a stretch, that’s when investors start to pull out. But by and large, this trend is here to stay for quite some time. Investors are more confident about the future as compared to a few months ago,” he adds.
According to CRISIL Research, the mutual fund industry’s average assets under management (AUM) crossed the Rs 12 trillion mark in the quarter ended June 2015 to close at its record high.
The industry grew for the seventh consecutive quarter, up 3.3 per cent or by Rs 395.51 billion to Rs 12.28 trillion (excluding fund of funds) in the latest quarter, as per data released by the Association of Mutual Funds in India (AMFI).
Foreign institutional investors (FIIs) and foreign portfolio investors (FPIs), on the other hand, sold a net around Rs 10,000 crore equities in past two months. They made net outflow of Rs 3,460 crore in May and Rs 6,149 crore in June, data suggests.
Lalit Nambiar, senior vice-president and fund manager, UTI Mutual Fund, suggests that investment by MFs into equity markets is also a function of inflows in general, including new schemes launches and beyond a certain limit, mutual funds cannot sit on cash.
“There were concerns regarding the monsoon, which have abated somewhat and investors possibly waiting on the sidelines have become more confident of prospects,” he says.
Going ahead, analysts expect the markets to remain volatile as globally things are still in a flux. On the domestic front, it will take a couple of quarters for any earnings growth pick up to show through. Reports suggest that while existing projects have speeded up, new projects are not being announced.
“While the markets wait for a pick-up in earnings and an improvement in macros, even small tremors can create a lot of nervousness in the market. On the positive side, the global scenario for commodities does not look bright and this is a tailwind for Indian markets. On midcaps, I believe that while there are opportunities, it is a very stock specific market now and investors must be cautious about stock selection,” Nambiar adds.