SIP contributions cross Rs 26,000 cr for first time: What FPIs bought, sold

Monthly Mutual Fund SIP contribution amount crossed the Rs 26,000 crore mark for the first time, reaching Rs 26,459 crore in December 2024, compared to Rs 25,320 crore in November, as per data provided by Association of Mutual Funds in India.

 

The number of new SIPs registered in December 2024 stood at 54,27,201, up from 49,46,408 in November. The SIP AUM was Rs 13.63 lakh crore in December, compared to Rs 13.54 lakh crore in November.

 

The number of SIP accounts reached an all-time high of 10,32,02,796 in December 2024, compared to 10,22,66,590 in November 2024.

 

Domestic investors continued with their investment spree into the equity oriented mutual funds in the month of December as well. The correction in the markets during the month provided a good investment opportunity for investors, which they didn’t fail to capitalize on. This logged the 46th consecutive month of net inflows into the segment.

 

 

The equity mutual fund’s assets under management as of December 2024 stood at Rs 3,057,548.59 crore as against Rs 2,179,424.11 crore in December 2023, which is an increase of a robust 40%.

 

"During the month, investors pumped in Rs 41,156 crore, which was higher than the net inflow of Rs 35,943 crore in November. In 2024, the segment received a net inflow of Rs 394,260 crores, which was sharply higher than the net inflow of Rs 161,578 crores in 2023.  The investors focus towards making the most of the market fall in December could be gauged from the fact that the fund mobilized in December was sharply higher than the fund mobilized in November.

The flows have been consistent across the segment signifying a broader appeal of the equity markets. All the equity-oriented categories received net inflows during the month," said Himanshu Srivastava – Associate Director- Manager Research, Morningstar Investment Research India.

 

Thematic funds witnessed an increase in inflows from previous month, which accounted for 37% of the equity monthly inflows reflecting investors’ confidence for thematic opportunities and their aggressive positioning. Additionally, 33 open-ended NFOs were floated in December 2024, which mobilised Rs.0.14 lakh crore with sectoral/thematic funds accounting at Rs.0.11 lakh crore or a share of 83%.

 

"CY 2024 ended on a strong note as equity mutual funds witnessed an increase in net inflows to Rs 41,155 crores in December 2024, up from Rs 35,943 crores in November, up 14.5% on a month-on-month (MoM) basis. This contrasts with the decline in the previous month by 14%. Thematic fund continues to be preferred by investors as it accounted for the maximum share (~37%) in this category driven by many new fund offers. Net inflows into thematic funds doubled from November," said Deepak Ramaraju, Senior Fund Manager, Shriram AMC.

 

Mid and small cap fund categories; and categories which have significant exposure in these two segments, continued to receive strong inflows highlighting investors preference for this segment, largely driven by the high returns that they have generated over the last few years. However, investors should be wary of inherent risk in these segments and be judicious while investing. That should be in line with their risk appetite.

 

In the individual fund category space, mid and small cap funds recorded a monthly growth  of 4.3 percent in net inflows at Rs 5,093 crore and 13.52% to Rs 4,667 crore, respectively. "This shows that despite higher valuation of mid and small cap stocks, investor’s preference towards these categories remains unabated due to the high growth expectation," said Ramaraju.

 

"The surge in the equity markets and the returns that equity oriented mutual funds have generated in the last few years have motivated several investors to enter into the equity markets, and its pleasing to see more and more investors using mutual funds route to do so because of the obvious benefit that mutual fund offers. This is evident from the increasing folio numbers. The number of folios went up by 3,342,023 folios, a jump of over 2% in December. But a more mature behavior is, them not panicking during correction and rather utilizing it to build exposure. However, it’s important for investors to have the right and reasonable expectation and not get swayed away by the quantum of returns generated in the past," said Srivastava.

 

In December 2024, foreign portfolio investors were net buyers of $1.83 billion in Indian equities, after the persistent selling in October and November. FPI buying was visible in the first half of December 2024. However, the second half saw selling.Foreign portfolio investors (FPIs) for the FY25 (till date) have remain net seller to the tune of Rs 21902 crore, noted Bajaj Broking. They have extended their selloff in India's secondary markets into the new year as well with Foreign investors selling shares worth nearly Rs 11,500 crore or $1.33 billion in the first six trading sessions of January 2025.

 

Sectors with inflows contributed $4.33 billion, whereas outflows amounted to $2.50 billion.

 

Despite significant FPI buying activity in the first half of December, the latter half witnessed some selling pressure. Overall, sectors with positive inflows contributed $4.33 billion, while sectors with outflows accounted for $2.50 billion.

 

Sector-Specific Trends:

 

• The IT sector experienced strong defensive buying, acting as a hedge against the weakening rupee.
• Financial services saw net buying in the first half but witnessed net selling in the second half of December.
• Realty and healthcare sectors attracted substantial inflows, with consistent buying across both halves of the month.
• The "others" category reflected FPI interest in IPO investments.

 

"The IT sector experienced robust defensive buying throughout December, serving as a hedge against the depreciating rupee. Financial services witnessed net buying during the first half of the month, but FPIs turned net sellers in the second half. Realty and healthcare sectors attracted significant positive inflows, while the "others" category primarily reflected FPI investments in IPOs. Notably, the key positive flow sectors showed consistent buying trends across both halves of December 2024," said the brokerage.

 

What FPI's sold:

FPI selling remained relatively moderate in December 2024. The bulk of the outflows were concentrated in the oil & gas and automobile sectors. However, these sectors, along with FMCG, witnessed some positive developments later in the month. Rural demand showed signFs of recovery, and auto sales surged sharply in December, driven by the festive season. Additionally, expectations of middle-class tax breaks in the upcoming Union Budget have shifted the outlook positively for consumer goods.

 

Moderate Selling and Sectoral Developments:

 

• FPI selling was moderate, primarily affecting the oil & gas and automobile sectors.
• Positive developments emerged later in the month for these sectors, as well as for FMCG.
• Rural demand showed recovery signs, and auto sales surged during the festive season.
• Expectations of middle-class tax breaks in the Union Budget boosted consumer goods' outlook.

 

Mixed FPI Sentiment Since August 2024:

 

• FPIs maintained an ambivalent stance toward Indian markets, influenced by several factors:
• The Fed cut rates by 100 basis points, while the RBI maintained its policy rates.
• Fiscal prudence by the government constrained capital expenditure growth, affecting GDP expansion.
• The upcoming Union Budget could reshape FPI sentiment significantly