Retail equity SIP inflows negate massive FPI pullout, help markets stay afloat in January

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Published: February 5, 2019 6:36:36 PM

The AMCs believe that the uptrend may continue in the coming months too as large amount of flow is expected through the SIP route that allows investors to invest in small amount periodically, instead of a lump sum payment.

mutual funds, MF, equity MF, systematic investment plan, SIP, retail investors, SIP inflow, foreign portfolio investors, FPIs, stock markets, mutual fund houses, asset management companies, AMCsBacked by continued investments through SIP by retail investors, AMCs have made investment of over Rs 7,000 crore in domestic equities in January.

Small domestic investors have taken charge of equity investments and powered the stock markets amid a massive FPI blackout. Backed by continued investments through systematic investment plan (SIP) by retail investors, Asset Management Companies (AMCs) or the mutual fund houses have made investment of over Rs 7,000 crore in domestic equities in January, negating the adverse impact of a huge pull out of Rs 5,200 crore by foreign investors.

Grabbing the opportunity created by the sell-off by foreign portfolio investors (FPIs) amounting to Rs 5,264 crore from the Indian equity markets, mutual fund managers bought shares worth Rs 7,160 crore on a net basis last month, as per the data available with Sebi and depositories, fund managers bought shares worth Rs 7,160 crore on a net basis last month.

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The AMCs believe that the uptrend may continue in the coming months too as large amount of flow is expected through the SIP route that allows investors to invest in small amount periodically, instead of a lump sum payment. The frequency of investment is usually weekly, monthly or quarterly. It is similar to a recurring deposit where investors deposit a small or fixed amount every month.

According to experts, the outflow by FPIs from equities indicates their ‘wait and watch’ approach ahead of the general elections.

“FPIs are taking cautious or ‘wait and watch’ stance towards India, which they have been maintaining for a long time,” said Himanshu Srivastava, Senior Analyst Manager Research at Morningstar Investment Adviser India.

“The focus would continue to be on economic growth and the general elections,” he further said, adding, “Other factors such as movement in crude prices and currency, which would have a bearing on the country’s macro-environment, and worries over global trade war will continue to guide the direction of FPI flows.”

Echoing similar views, Bajaj Capital Senior VP and Head Investment Analytics Alok Agarwala said escalating trade disputes, domestic macroeconomic concerns viz, weakness in currency, movement of crude oil prices, trade deficit would weigh on inflows from FPIs.

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