Mutual funds registered an inflow of a staggering Rs 13,610 crore in equities in November, mainly on aggressive buying by fund managers due to a sharp plunge in stock markets. With this, the total funds mobilisation crossed Rs 38,800 crore in stock markets so far in 2016. For the whole 2015, fund managers had invested over Rs 45,000 crore in this space.
Industry insiders attributed the latest inflow to aggressive buying by fund managers on account of sharp plunge in equity markets. Generally, fund managers step up their buying trend whenever equity markets undergo a sharp correction.
According to the data released by the Securities and Exchange Board of India (Sebi), mutual fund managers invested a net sum of Rs 13,610 crore in November. Fund managers expect the market volatility to continue and they will invest at lower prices. This comes following an inflow of Rs 8,106 crore in October. They invested Rs 3,841 crore in September and Rs 2,717 crore in August.
Prior to that, they had pulled out Rs 120 crore from markets in the preceding two months (June-July). They had infused Rs 7,149 crore in equities in May while they withdrew Rs 575 crore and Rs 10,198 crore in April and March, respectively. They had pumped in Rs 13,184 crore in January-February.
“Such inflows are possible only when retail investors have participated in large numbers by investing in equity funds, viewing the weakness as opportunity. In other words, retail investors have reposed faith. Traditionally too, domestic investors have been net buyers when FPIs have sold and the same phenomenon is playing out now,” Head of Mutual Fund Research FundsIndia.com, Vidya Bala said.
The BSE benchmark Sensex has plunged 4.6 per cent during the period under review due to uncertainty over demonetisation impact on the economic growth.
A mutual fund is an investment vehicle with a pool of funds collected from various investors to buy stocks, bonds, money market instruments and similar assets.