Taking advantage of lower valuations, domestic mutual funds pumped in a whopping Rs 13,000 crore in the stock markets in the first two months of this year, even as overseas investors pulled back from equities.
This is on top of Rs 70,716 crore already invested by mutual fund houses in the entire 2015.
Given the sluggish trends in the real estate market, mutual fund houses are expecting to attract a larger share of Indian households' savings from this year, industry experts said.
Mutual funds poured in Rs 5,946 crore in equities in February and Rs 7,328 crore in the preceding month, taking the total net investment to Rs 13,274 crore, as per the latest data available with Sebi.
In comparison, foreign portfolio investors (FPIs) were net sellers of equities worth Rs 16,645 crore during the same period.
However, FPIs were net buyers of equities to the tune of Rs 17,806 crore last year. Before that, they had invested Rs 1 lakh crore in each of the preceding three years.
The investment by mutual funds comes at a time when the stock market crashed due to sharp slump in crude oil prices and concerns over global slowdown. The BSE's benchmark Sensex has plunged by 12 per cent in the first two months of 2016.
Domestic mutual funds went on a buying spree during the period to take advantage of the lower valuations, experts said.
"Domestic mutual funds have been bullish on the stock market ever since the Narendra Modi-led BJP government came to power at the Centre in May 2014," Quantum AMC Director I V Subramaniam said.
Retail participation could provide the much needed liquidity to the stock markets that have been largely driven by FPIs for the past few years, he added.
Mutual funds are investment vehicles that pool funds collected from investors to buy securities such as stocks, bonds, money market instruments and other assets.
