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The market turmoil failed to dent the sentiment of retail investors as they poured in Rs 19,705 crore in equity-oriented mutual fund (MF) schemes in February. This was the 12th consecutive month of inflows into the equity category.

The data from Association of Mutual Funds in India (Amfi) shows that all the 11 categories of equity funds recorded net inflows. Among the equity categories, flexicap and sectoral funds saw net inflows of Rs 3,873.56 crore and Rs 3,441 crore respectively.

Inflows through the systematic investment plan (SIP) continued to remain strong at Rs 11,437.70 crore, only Rs 79 lower compared to January.

Total assets under management of SIP fell to Rs 5.49 trillion in February as against Rs 5.76 trillion in January due to the correction in the market.

In February, S&P BSE Sensex Index lost around 3 per cent, while S&P BSE Midcap Index and S&P BSE Smallcap Index were down by 5 per cent and 8.8 per cent, respectively.

“Investors have realised that market correction is not going to derail the Indian growth story. Yes, there might be a short-term impact due to the ongoing war but from a long term perspective investors have shown confidence in India. Even the redemptions have come down in February compared to January in equity funds,” said Sunil Subramaniam, managing director, Sundaram MF.

Redemptions for February stood at Rs 14,072 crore as against Rs 18,346 crore in January. The numbers quell fears of increase in redemption pressure due to wild wings in the market.

Market participants say that despite fall in the markets, investors have continued to invest through SIPs. Many see the correction as a good buying opportunity after a relentless up move between March 2020 and October 2021.

Kavitha Krishnan, senior analyst - manager research at Morningstar India says, “Despite witnessing significant outflows from foreign portfolio investors (FPIs) counters, domestic investors continue to use the market correction to invest in Indian equities. Despite concerns over the growing oil prices and the conflicts between Russia and Ukraine, which have in turn impacted the commodities markets in India, the markets have been witnessing positive flows. The trend is indicative of the increasing investor interest and awareness around investing.

February also saw hybrid schemes and passive funds continuing positive flows. Other schemes which include, exchange traded funds (ETFs) and fund of funds investing overseas saw net inflows of Rs 16,521 crore.

However, debt funds saw net outflows to the tune of Rs 8,274 crore led by high redemptions from short duration funds, floater funds and corporate bond funds. However, liquid funds saw net inflows of Rs 40,273 crore.

Aashwin Dugal, co-chief business officer at Nippon India MF says on the fixed income front, US Fed action and policy normalisation continued to weigh on short term yields. Hence industry witnessed redemptions from ultra-short and short term funds mainly led by corporate investors.

Overall, the MF industry recorded net inflows of Rs 31,533 crore and average AUM stood at Rs 38.6 trillion in February.

Also Read |  The impact of the Ukrainian-Russian conflict on the Indian stock market

India’s markets regulator has approved the public listing of Life Insurance Corporation of India (LIC), sources told 'Business Standard' on Wednesday as the war in Ukraine casts a shadow over the state-owned firm’s IPO timing.

The government is looking to sell a 5 per cent stake, or 316 million shares, in the insurer through the IPO. Investment banking sources said Sebi issued the so-called final observations on Tuesday evening.

LIC's IPO is one of the fastest to get Sebi approval; the insurer had filed its DRHP on February 12. Once a DRHP obtains final approval, the company can launch its share sale.

However, LIC may not launch its IPO immediately given the volatile market conditions. Investment bankers said they would want to wait till the market sentiment improves.

Benchmark indices have come off 9 per cent this year amid a surge in global oil prices following Russia's attack on Ukraine. The government is planning to divest 316.2 million shares, 5 per cent stake, in IPO.

The government, which holds 100 per cent stake in LIC, was looking mop up between Rs 60,000 crore and Rs 75,000 crore in the IPO. This would peg LIC's value between Rs 12 trillion and Rs 15 trillion.

The final valuation will be decided closer to the IPO.

The mega offering is coming at a time when foreign portfolio investors (FPIs) have hit an exit button. They have pulled out over Rs 1 trillion from domestic stocks so far this year.

The IPO will test the appetite and depth of the domestic market as it is by far the largest share sale seen in the history of Indian markets.

The previous biggest IPO of Paytm worth Rs 18,300 crore had bombed with shares crashing more than 60 per cent.

LIC, which is a household name in the country thanks to its over 250 million policy holders, has created significant buzz among retail investors already.

The LIC share sale is being handled by 10 investment banks led by Kotak Mahindra Bank and Axis Capital.

Also Read | Network18 Exclusive | Raghuram Rajan: Inflation could stay higher for longer

In conversation with Network18, former RBI Governor Raghuram Rajan said there is a real risk that inflation could get entrenched if the Ukraine conflict continues for long. But he adds that the West is looking to energise other sources of fuel supplies.

Also Read: Explained | What now as the US bans Russian oil?

Network18: Will the sanctions stick? In the past, controls imposed by Trump on Iran, China did not go away when Biden came in. Sanctions tend to stay, so therefore can this be structurally a longer inflation?

RGR: Yes, and I would offer a qualified no also. The unprecedented nature of the attack on Ukraine has galvanised the Western world along with Japan, so I think they are very serious about sanctions. This is a violation of any notion of the world order, so therefore it has to be pushed back on.

So, they are much more determined to implement the sanctions and prevent any leakages. That is on the Yes side. On the No side, given the kind of damage this could do to the global economy, Russia being a huge exporter of energy, critical commodities like Nickel, Palladium, Neon, Xenon as well as fertilisers and grains.

Also Read: PM Modi asks financial institutions to come out with futuristic ideas to fund emerging economic needs

I think there is a sense that the damage is to be limited by energising other sources of supplies. So, on the oil front, for example, we have talks going on with Venezuela, and Iran, in an attempt to bring Iran's oil back. And of course, Shale, which has been very very circumspect of production because they did not want to invest too much. Shale will also come back. So over a few months, the supplies will also start responding to the high prices even as demand starts falling because of the high price

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