Despite the on-ground challenges of regional lockdown amid virus cases, Indian markets continued to rise, propelling mutual fund investors to pump money into equity schemes. Net inflows into equity mutual fund schemes were at 14-month high, rising to ₹9,235.48 crore in May, a steady climb in the last three months and the highest in 2021, according to data released by the Association of Mutual Funds in India (Amfi) on Wednesday.
In March last year, these schemes received a net inflow of ₹11,484.87 crore and since then it had been dwindling. Last May, equity schemes saw a net inflow of ₹5,045.53 crore, and in April this year, equity schemes saw a net inflow of ₹1,783.13 crore.
“For the third consecutive month, equity mutual fund inflows have been positive. Investors who have accumulated higher savings in the last year due to lower spending and were staying on the sidelines are slowly getting back. The strong returns in equities and the stability of the markets despite the second wave provide the much-needed positive nudge,” said Arun Kumar, head of research, FundsIndia.
Multi-cap category was the biggest beneficiary during the month. Mid- and small-cap categories also received significant flows, while sector and thematic funds also continue to receive enhanced traction from investors. Except for the equity-linked savings scheme (ELSS) category, all the equity-oriented categories have witnessed net inflows.
“Significant improvement on the coronavirus situation with daily covid-19 cases falling consistently, along with improving recovery rate over the last few weeks, would have provided comfort to investors. Good quarterly results, positive earnings growth outlook over the long-term, and waning concerns of any severe impact of the second wave of the pandemic on the economy, would have also boosted sentiments. This would have prompted investors to again allocate assets towards equities,” Himanshu Srivastava, associate director- manager research, Morningstar India.
Overall, redemption from equity schemes also narrowed to ₹14,169.63 crore in May from ₹17,282.95 crore in previous month. However, in May last year it was ₹7,283.23 crore.
“While the funds mobilized in May were higher than in April, redemption in May fell significantly from April, suggesting that investors are fast gaining confidence on the market outlook and are willing to invest substantially,” Srivastava added.
The contribution of monthly systematic investment plans (SIPs) increased slightly to ₹8,818.90 crore from ₹8,590.89 crore in April.
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