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.
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