MF inflows peak in June qtr; FPIs better previous records

By: | Updated: August 8, 2015 1:21 AM

Keeping the faith on India’s growth story, domestic asset management companies (AMCs) and foreign portfolio investors (FPIs) increased...

Keeping the faith on India’s growth story, domestic asset management companies (AMCs) and foreign portfolio investors (FPIs) increased their ownership in Indian equities for the quarter ending June 2015 even as uncertainties related to Greece and China markets perturbed investors globally.

An analysis of ownership patterns in Indian equities by JPMorgan observed that domestic mutual fund ownership in Indian equity markets increased 30 basis points (bps) to an all-time high of 4.3%.

FPIs owned 20.1% of Indian equities as on the quarter ending June 2015, up 10 basis points (bps) from the previous quarter. Currently the overweight is 280 bps compared with the 430 bps overweight weightage at January-end.

JPMorgan in its quarterly report stated that FPIs continue to remain ‘overweight’ India compared to the benchmark in emerging market (EM) portfolios.

The ownership of insurance companies has largely remained unchanged while retail ownership increased marginally to 7.8%.

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Bharat Iyer, MD & head of research – India, JPMorgan attributed the sharp decline in global crude oil prices as the prime reason for the improvement in investor sentiment towards India. “Investor sentiment in the equity market has improved. Small and Mid-capital indices have outperformed as the trading volumes and values increased sharply,” Iyer noted.

Equity mutual funds witnessed net inflows for the 14 straight month and in June it saw inflows of $1.92 billion making it the best monthly performance since January 2008. During the month of June, mutual funds invested Rs 94.5 billion ($1.5 billion) in equity markets which is the highest since April 2007. As a result of strong inflows, average assets under management (AUM) for equity funds rose to Rs 3.72 lakh crore ($58.3 billion) in June, showed Amfi data.

During the quarter, healthcare and industrials  witnessed the maximum rise in FPI holdings while technology and consumer discretionary sectors, comprising automobile companies among others, saw the highest fall in FPI holdings. In terms of companies, FPIs ownership rise was the highest in ICICI Bank (3.9%) and HDFC (2.6%) while it fell by  2.1% in Infosys and 1.8% in Reliance Industries.

On the other hand, consumer discretionary and healthcare sectors witnessed maximum rise in MF holdings, while telecommunication services witnessed the maximum fall.

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