Domestic mutual funds pumped in over Rs 41,000 crore in the debt market in November, taking their combined investment to Rs 4.33 lakh crore in 2013 so far.
Mutual funds invested in debt schemes throughout 2013, barring July. The funds pulled out Rs 23,740 crore from debt market in July after the Reserve Bank of India (RBI) took measures to prevent the rupee from falling against the dollar, which impacted debt market securities.
On the other hand, net outflows by foreign institutional investors were nearly Rs 6,000 crore from debt market last month, according to latest data available with market regulator Sebi. This takes the total funds withdrawn by FIIs from debt market to over Rs 56,000 crore in 2013 so far.
As per Sebi data, domestic mutual funds (MFs) were net buyers in the debt market during November and bought debt schemes to the tune of Rs 41,623 crore.
MFs took bullish stance on the debt market and invested Rs 4.33 lakh crore in debt schemes in the 11 months (January-November) of the calendar year.
However, MFs have pulled out around Rs 13,000 crore from equities during the period under review.
As per market participants, fund houses have poured most of the money in debt-oriented schemes because of the better returns offered by such schemes compared to bank fixed deposits. Another reason for investing in debt schemes was lower-risk associated in it than equity funds.
"With equity market remaining volatile in 2013, domestic MFs focused on the debt market to take benefit from higher interest rates," a market participant said.
A mutual fund is an investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets.