Sensex, Nifty slump fails to dampen equity mutual fund inflows
Mumbai: Net inflows into equity schemes of mutual funds continued to be strong in February even as equity markets witnessed their worst correction in two years, owing to turmoil in world markets and the over Rs12,636 crore Punjab National Bank (PNB) fraud. While March might continue to see strong inflows as investors plough money into tax-saving schemes, analysts were cautious.
Net inflows into equity mutual funds in February came in at Rs16,278 crore, the best in three months, and a rise of 5.7% from January even as benchmark indices Sensex and Nifty eroded by 4.9% each, the biggest such decline in two years.
On Thursday, the Sensex gained 318.48 points, or 0.96%, to close at 33,351.57 points, breaking a six-session losing streak.
To be sure, total inflows into equity schemes came down by 26.7% to Rs34,641 crore in February, but at the same time redemptions slowed down too, and were 42.3% lower than the previous month at Rs18,373 crore.
“So far, we have not seen people getting cautious on SIPs (systematic investment plans). Money is flowing into equities, but, of course, inflows have slowed a bit,” said Vidya Bala, head of mutual fund research at Fundsindia.com.
SIPs allow investors to regularly invest small amounts that go into equities instead of making lump sum investments at various points of time. Such investments are usually made on a monthly or quarterly basis.
“However, if the trend of volatility continues, I do see concerns about outflows picking up. Also, one needs to remember equity-linked savings schemes will go slow after the financial year-end,” said Bala.
Going in March, the inflows into equity schemes are seen continuing strong, as investors will plough money in tax-saver funds ahead of the end of fiscal year 2017-18, but may recede post that as new financial year sets in.
“March will usually see higher ELSS flows, which is a seasonal thing, and while near term could be subdued , the market fundamentals remain strong,” said Raghvendra Nath, managing director, Ladderup Wealth Management Pvt. Ltd.
The total assets under management (AUMs) of the mutual fund industry dropped marginally to Rs22.2 trillion, on the back of a decline in value of equity funds