After touching a high of Rs 5,774 crore in May, there has been a slowdown in net inflows into these schemes.
While the first quarter (January-March) of calendar year 2003 witnessed a heavy net outflow from these schemes, the month of April witnessed a sudden spurt in net inflows. The quarter witnessed a massive net outflow of Rs 13,414 crore from the debt-oriented schemes with various maturities.
However, the current financial year began on an impressive note with the schemes attracting huge investment interest, putting an end to the negative inflow regime. In April, these schemes received a net inflow of Rs 3,232 crore.
The turnaround in investor confidence was mainly on account of a sharp rally in bond prices backed by rate cut expectations.
The Reserve Bank of India (RBI) had cut cash reserve ratio (CRR) and bank rate by 25 basis points during the end of April this year. Reacting to the rate cut, debt markets zoomed and inflows touched a high of Rs 5,774 crore in the following month, which has been the largest in the current calendar year so far.
In June, net inflows slipped to Rs 4,057 crore mainly due to a rise in redemptions to Rs 9,651 crore (Rs 7,992 crore in May) and a marginal fall in sales.
In July, although there was a decline in redemptions, sales fell to Rs 12,180 crore compared with Rs 13,708 crore in June. Net inflows, therefore, declined to Rs 3,541 crore.
In August, although there was a rise in sales compared with the previous month, a sharp rise in redemptions took the toll of net inflows which fell below the Rs 3,000-crore mark.
During the current financial year till August, the combined monthly net inflows have been Rs 19,565 crore.
The decline in net inflows has mainly been due to mutual funds facing redemption pressures on account of advance tax outflows and a drop in liquidity in the debt markets, sources said.
The repo rate cut in August took the yield on 10-year benchmark government paper to below 5.3 per cent. However, the month of September should be a quieter month, according to DSP Merrill Lynchs latest fixed-income monthly report.
The report also observed that the market is in an overbought position.
Factors like strong growth, the recent rally, limited prospects of further repo rate cut in the near term neutralise the positives.
Also, a drop in visible liquidity and concerns over the impact of RIB repayment and half-year ending profit-taking by banks could keep gilts subdued, the report said.