Volatility in Indian stock markets has led to a slowdown in the mobilization of equity funds, with inflows trending downward in recent months as lump sum investors have stayed on the sidelines due to high valuations.
According to data from the Association of Mutual Funds of India (Amfi), investment funds raised Rs 28,671.39 crore in October, compared to Rs 36,656.66 crore in September. During the current fiscal year, equity funds have raised over Rs 30,817 crore per month on average.
Between July and September, mobilization exceeded Rs 30,000 crore each month as investors favored the route of new fund offers (NFO) – inflows reached Rs 42,100 crore in July, the highest so far. ‘now this year, as stock NFOs have raised Rs 13,709 crore.
“Investors have only invested through NFOs in recent months. The industry has been aggressive in pushing the NFOs and I think it will be of great concern if there is a strong correction in Indian stocks, ”said a senior industry official.
Since July, fund houses have raised over Rs 27,151 crore through NFOs in equity funds alone. The amount increases to Rs 57,000 crore in the last four months if the NFOs of all categories of plans are factored in.
“Over the past several months, we have advised investors to avoid paying lump sums, given the significant recovery in broader sectors and markets. Investors are advised not to be swayed by the current volatility and to resort to an accumulation strategy, ”ICICI Direct Research said in a note.
Over the past month, Sensex returns fell 3.33% from 2.02% last week. The slowdown in gross inflows on equity funds also impacted net inflows in October. Equity funds recorded net inflows of Rs 5,214 crore in October, compared to Rs 8,677 crore in September.
However, entries via the systematic investment plan (SIP) route are a source of solace for the industry, totaling Rs 66,973 crore so far this year, after surpassing Rs 10,000 crore in September and October. .
Jimmy Patel, MD and CEO of Quantum AMC, said: “The SIP portfolio remains very strong, although flat rate investors have been left on the sidelines due to high valuations. Having said that, we believe we may continue to see higher inflows in equity programs. “
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