Despite volatile equity markets, the flow into equity schemes is witnessing a reversal of trends with net inflows of Rs 1,200 crore in May. Meanwhile, the 30-share Sensex of the Bombay Stock Exchange (BSE) fell 3.71% in May following Greece crisis and heavy selling from the foreign institutional investors (FII). ?It is definitely a health sign. It shows that investors are investing logically and not worried about the market corrections ,? said Ajay Argal, co-head equity investments at Birla Sun Life Mutual Fund.
In March, the equity market had witnessed net outflows Rs 3,100 crore. According to, latest AMFI data, 98% of investors are retail investors. Though equity inflows have been positive, the figure is not all that encouraging. After the ban of entry load (from August 1, 2009) by the market regulator, Securities and Exchange Board of India (Sebi) , equity funds have witnessed continuous redemption to the tune of Rs 7,970 crore till December 2009.
But this year, three months have seen positive inflows into equities. Baroda Pioneer Mutual Fund CEO Rajan Krishnan said, ?I would rather look at the gross sales figures of equity schemes as compared to net inflows (which is sales minus redemption) as it gives the real picture.? Gross sales indicate the extent of fresh buying of equity funds by investors. In May, the sales of equity schemes were over Rs 5,283 crore while redemption’s stood at Rs 4,027 crore. In the past, sales have been as much as redemptions in terms of value, indicating that the undertone is not that bearish as the net inflows figures might imply.
While equity funds saw inflows in May, income and liquid schemes saw net outflows of Rs 62,960 crore with most coming out from income schemes and liquid schemes. Income schemes saw outflows of over Rs 35,000 crore, while liquid schemes witnessed redemption of approximately Rs 29,300 crore. Lakshmi Iyer, head fixed income and products at Kotak Mahindra Mutual Fund said, ?The outflows were largely in the ultra short terms funds as banks redeemed for the 3G auctions. With tight liquidity situation, we might continue to see some outflows in the debt category in the coming days.?