Mutual funds which have been contributors to the domestic institutional investor flows through systematic investment plans (SIP) on Tuesday released their data on June month flows.
Indian equities ended Wednesday’s volatile session in the red breaking their five day winning streak. Stock markets were tracking global cues which were tepid on rising Covid-19 cases in different countries around the world. The 50-share index Nifty fell as much as 93.9 points or 0.87% to close at 10,705.57. The benchmark Sensex was down by 345.51 points or 0.94% to close at 36,329.01.
The benchmark Nifty which had a gap up witnessed a volatile trading session and completely gave up its gains during the last hour of trading session. The India Volatility Index (VIX) which is the fear gauge of the market rose to 26.09 up from its previous close at 25.1. India VIX continues to trade at its fourth month lows. Trading in Indian markets turned volatile after global markets traded in the red following the unabated rise in novel Coronavirus cases in countries all around the world.
Investors dumped risky assets as this cast a doubt on the hopes of a quick global economic recovery throughout the world. The Dow Jones Mini futures were down 10 points indicating a flat opening with a negative bias for US markets overnight. The European markets were tracking cues from the Dow Futures with stock markets in the United Kingdom, Germany, and France trading 0.02% to 0.81% lower. The market sentiment soured after the novel Coronavirus cases touched the grim 3-million mark in the US, while World Health Organization (WHO) acknowledged that there was emerging evidence that Covid-19 was an airborne virus. On Tuesday Gita Gopinath, the chief economist at the International Monetary Fund, warned that many countries would have to restructure their debt in the aftermath of the pandemic as borrowing surges.
G Chokkalingam, chief investment officer, Equinomics Research and Advisory, said, “If there is a continued redemption by the retail investors from mutual funds, then there could be forced selling of equities by the mutual funds. Same could weaken the markets as it would coincide with poor June quarterly results anticipated from most corporates.”
Foreign portfolio investors (FPIs) have till July 7 pulled out $119.4 million from the Indian markets. Meanwhile, domestic institutional investors have bought stocks worth Rs 1,432.81 crore. Mutual funds which have been contributors to the domestic institutional investor flows through systematic investment plans (SIP) on Tuesday released their data on June month flows. The inflows into equity funds stood at Rs 240.55 crore which is the lowest since June 2016. The SIP inflows are known as sticky funds and have helped support the market in times of volatility. N S Venkatesh, chief executive, Association of Mutual Funds in India (AMFI), said, “Reducing interest rates, gradual unlocking of economic activity with expected return to normalcy has seen renewed buoyancy in markets leading to mutual fund AUMs crossing Rs 25-lakh crore mark for the first in the last three months of this fiscal year 2020-21. With monthly SIP contribution at Rs 7,927.11 crore, mutual fund SIP investors may have opted for a pause facility and we should see SIP contribution surging in Q4CY20.”
Ahead of the weekly expiry on Thursday, the equity markets during the day’s trading session witnessed volumes worth Rs 19.45 lakh crore against the six month average of Rs 14.49 lakh crore. The biggest gainers on Nifty were IndusInd Bank, Vedanta, JSW Steel, Hindalco, and Dr Reddy’s Laboratories up by 4.5%, 2.7%, 2.31%, 2.04%, and 1.69%. The biggest losers were Bajaj Finance, Zee Entertainment, Asian Paints, Tata Motors, and HCL Technologies, down by 4.62%, 4.6%, 3.25%, 3.16%, and 2.97%. Among the broader indices, Nifty Midcap and Nifty Smallcap were down by 0.39% and 0.24%. Sectorally, the biggest losers were Nifty Realty, Nifty Auto, Nifty IT, Nifty Media, and Nifty Financial Service.