Flows to India Stocks Funds Revive as Modi Win Spurs Risk Demand
Stock plans took in 54.1 billion rupees ($778 million), according to the Association of Mutual Funds in India.
(Bloomberg) -- Flows into Indian equity mutual funds in May rebounded from the smallest in 31 months as Prime Minister Narendra Modi’s comfortable electoral win spurred appetite for risk assets.
Stock plans took in 54.1 billion rupees ($778 million), according to the Association of Mutual Funds in India. That’s an increase from 46.1 billion rupees that the funds got in April, the least since September 2016, data compiled by Bloomberg show.
Sentiment for Indian assets has improved amid expectations Modi’s return to power with a stronger mandate will enable him to take measures to boost a sagging economy. The S&P BSE Sensex of shares capped its third straight month of gains in May, the rupee is near a two-month high and benchmark bond yields are hovering above 18-month lows.
“As elections are behind us, positive factors of low inflation and falling interest rates will increase inflows,” N. S. Venkatesh, chief executive officer at AMFI, said in a conference call.
Funds that invest in mid- and small-cap stocks contributed 27 billion rupees, or about half the month’s inflow, AMFI data show. Venkatesh said flows to this group of shares may increase as investors bet “on the strong earnings potential of some mid-sized firms.”
Insights
- Average industry-wide assets totaled 25.4 trillion rupees.
- Money-market/liquid funds got about 725b rupees in May versus 962 billion rupees in April, while overnight plans saw an inflow of 23.5 billion rupees compared with 957.4 million rupees in April.
- Hybrid funds, which hold both stocks and bonds, posted an inflow of 12.7 billion rupees versus an outflow of 16.1 billion rupees.
- NOTE: AMFI didn’t provide comparative numbers as it changed the way it reports monthly flows data to comply with market regulator’s rules on re-classification of mutual funds
To contact the reporters on this story: Ameya Karve in Mumbai at akarve@bloomberg.net;John Xavier in Mumbai at jxavier20@bloomberg.net
To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, Ravil Shirodkar, Margo Towie
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