Mumbai: A weak Indian stock market hit inflows into domestic equity funds in February but did not trigger major redemptions, data from the Association of Mutual Funds in India (AMFI) showed.
Existing stock funds collected Rs50 billion in February, the lowest since September and 60% less than January. But the outflow of Rs37.3 billion was half of last month and lowest since July 2006, the data showed.
“There is a slowdown in inflows because of the market volatility but it has not dramatically brought redemptions to the market,” R.S. Srinivas Jain, chief marketing officer of SBI Funds Management Pvt Ltd, said.
“We as a fund house have seen redemptions but not significant. In fact there is a dip in the month of February in the percentage of redemptions vis-a-vis what we had in January and in December,” he added.
A 21% drop in the Sensex till so far in 2008 has wiped out nearly a fourth of the net values of equity funds but has not dampened interest, with many investors looking to dips as buying opportunities.
Indians poured a record Rs136.8 billion into equity funds in January, shrugging off a 13% decline in the benchmark index in the month.
Domestic investors have never pulled out money in months when markets fell, at least since 2006, AMFI data show.
Investors’ confidence has been battered this year by fears of spreading credit market woes, risk of a U.S. recession and as commodity and oil prices push inflation higher. Worries about foreigners selling share holdings has also eroded support.
The Sensex on Tuesday closed about 24% lower then the all-time high it hit on 10 January.