NEW DELHI: Net inflows in equity schemes of mutual funds in October were the highest in seven months, as investors stayed put despite a correction in the market, data from the Association of Mutual Funds in India (Amfi) showed on Friday.
Net inflows in equity mutual funds rose nearly 13% in October to Rs 12,622 crore compared with the previous month, the highest since February, after benchmark indices Sensex and Nifty corrected 4.93% and 4.98% in the month.
This was helped by lower redemptions. Redemptions from equity schemes were the lowest since December 2016 at Rs 10,183 crore.
“Redemptions are bottoming out. The initial scare of market correction has tapered. The total inflows are still not strong though. It is way below the year-ago figure,” said Vidya Bala, head of mutual fund research at Fundsindia.com.
“The total inflows may remain tepid, given the state elections this year and the general elections in 2019,” said Bala.
Fund managers agreed that domestic investors were not pulling out in a big way, unlike foreign investors.
“While foreign investors have been net sellers, domestic investors seem to be showing a lot of resilence in the face of heightened volatility,” said Navneet Munot, chief investment officer, SBI Funds Management Pvt Ltd.
Meanwhile, net inflows in liquid schemes were Rs 55,296 crore in October, a bounceback after strong outflows in September.
“Liquid schemes typically see an advance tax outflow in September. Also, last month the corporates were scared of the NBFC (non-banking financial company) crisis and feared potential defaults,” said Raghvendra Nath, managing director, Ladderup Wealth Management Pvt. Ltd.
“When they felt things have settled in, money has come back to liquid schemes,” he said.
The NBFC liquidity crisis started in September when Infrastructure Leasing & Financial Services defaulted on its payment obligations, followed by downgrades by credit agencies.
Fund managers shared the view. “People were paranoid in September, given the liquidity crisis that hurt NBFCs,” said Lakshmi Iyer, head of fixed income, at Kotak Mahindra Asset Management Co Ltd.
The total assets under management of the mutual fund industry edged up 0.87% to Rs 22.24 trillion as of October end.
Source: Press Trust of India
