Mumbai: Redemptions from mutual funds’ equity schemes rose 13% in July even as the market scaled record highs. Lack of a broad-based rally and worries over the wider Indian economy prompted investors to lock-in gains.

Redemptions rose to 11,628 crore, showed data from Association of Mutual Funds in India (Amfi). At the same time, total inflows grew at a modest 5.7% to 21,080 crore.

Net inflows however fell a marginal 2.2% to 9,452 crore.

“Redemptions are happening because of the elevated levels," said Kaustubh Belapurkar, director of fund research at Morningstar Investment Adviser India Pvt. Ltd. He said however there was comfort that new inflows weren’t much impacted.

The BSE Sensex began scaling new highs in July. On Tuesday, it rose 0.59% to a record closing of 37,887.56 points.

Belapurkar said equity funds are receiving money largely through systematic investment plans with marginal flows from lump sum payments. Others seem to agree.

“The sense is that market are a bit volatile, and mid caps and small caps are not participating, and there is some slowdown in the momentum of flows," said Jinesh Gopani, head of equities at Axis Asset Management Co. Ltd.

Sensex has risen up about 11% for the year-to-date, while BSE mid-cap and small-cap indices have dropped 8.85% and 12.29% respectively.

Inflows may stay subdued for a while as the market awaits clarity on direction amid upcoming elections and deterioration in macro-economic scenario.

The benchmark Brent crude is still around $75 a barrel, weighing on India’s fiscal deficit, as Asia’s third-largest economy imports about 80% of its crude oil needs.

Three states are to hold polls in 2018, and general elections are due in 2019.

“Investors are taking a pause from making huge lumpsum commitments, given that we are getting close to elections, and elevated levels of market," said Belpurkar.

Lower relative returns may have also deterred some investors.

“The money that has come in last 8-9 months hasn’t really yielded much returns compared to earlier months," said Gopani.