Equity Inflows Snap Two-Month Downtrend

Mutual fund inflows fell nearly 90 percent in February as investments into money market funds, used to park short-term surplus cash, plunged.

Investors pumped Rs 12,092 crore into mutual fund schemes in February compared with more than Rs 1 lakh crore in the previous month, according to data by Association of Mutual Funds of India.

Flows into equity and equity-linked schemes, however, snapped a two-month falling streak and rose 5.7 percent to Rs 16,268 crore sequentially. That’s despite more than a 4 percent decline in the benchmark Nifty 50 Index.

The net inflow of Rs 21,000 crore into all categories of equity funds is very healthy given that there has been volatility in the stock markets, said Swarup Mohanty, chief executive officer at Mirae Asset Global Investments. “It just shows that conviction among advisors and investors in equity. Purchases at these levels will augur well for wealth creation.”

Drop In Money Market Inflows

Inflows into liquid/money market funds that invest in short-term debt fell 99 percent to Rs 1,223 crore. Balanced fund inflows dipped for the second straight month to Rs 5,026 crore.

Sunil Subramaniam, chief executive officer at Sundaram Mutual Fund, attributed the lower money-market inflows to normalisation after the outflows in December. The strong January positive number was a natural reversal after quarter-end outflows of December when banks and corporates typically pull out money, he said.

Investors had pulled out Rs 1,27,597 crore from such funds in December and then poured in Rs 96,552 crore in January.

Assets Decline

The total assets under management declined 0.9 percent to Rs 22.2 lakh crore sequentially and equity assets were down 1.3 percent at Rs 7.76 lakh crore. Assets in the income category declined for the third straight month.

The decline came after a market correction due to the global risk-off, Subramaniam said.