Mumbai: Domestic liquidity into equities remained intact in September despite a sharp sell-off in markets. According to Association of Mutual Funds of India (AMFI) data, net inflows into domestic equity mutual funds rose to 11,172 crore in September, up 33.39% from August. In the same period, both Sensex and Nifty lost over 6%. In the year so far, Sensex has gained 1.23% while the Nifty has slipped 1.73%.

Redemption pressures from mutual fund equity schemes also eased in September at 11,849 crore from 15,702 crore in month-ago period. However, total redemptions increased 6.5% to 19.23 trillion in September.

According to Kaustubh Belapurkar, director of fund research at Morningstar Investment Adviser India Pvt. Ltd, equity inflows have gone up in September as investors were looking for dips for buying opportunities. “A similar instance can be compared to what happened in August last year, when markets had fallen and net inflow into equities increased. It clearly indicates that investors are not looking at markets with a short-term horizon but believe that the Indian markets structurally is intact," he said.

Belapurkar thinks that inflow into equity mutual fund schemes will continue. “There may not be huge increase but may not taper down," he added.

The total amount collected through systematic investment plans (SIPs) in September was 7,727 crore as against 7,658 crore in August. According to Amfi, total number of SIP accounts as on September stood at 2.44 crore.

Meanwhile, Assets under management (AUM) of the mutual fund industry fell by 12.5% hitting 22 trillion by September 2018. AUM was at 25.2 trillion in August.

So far this year, domestic institutional investors (DII) have pumped in 91,064.32 crore into Indian equities, a record high. However, foreign institutional investors (FII) have been net sellers of Indian shares in this year, with an outflow of $3.48 billion. Weakness in macros and high valuations of Indian have deterred foreign investors putting money into India.

As crude prices have risen 24.21% and Indian rupee has fallen 13.22% so far this year, analysts fear that the fiscal burden will weigh on markets.

“Nonetheless, the Indian market may face turbulence over the next 2-3 quarters with stock prices being dictated by unfavourable global macro, weak domestic macro, government actions and uncertain politics rather than the underlying fundamentals and fair values of stocks," said Kotak Institutional Equities in a note on 8 October.

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