Equity MF inflows rise 71% to ₹12,472 cr

Equity-oriented mutual funds, comprising open-ended and closed-end schemes, attracted net inflows of ₹12,472 crore in January, up 71% from December, according to the latest data from the Association of Mutual Funds in India (Amfi).

It marks yet another month of positive inflows into equity MFs since March 2021. Monthly systematic investment plan (SIP) contributions continued to rise month-on-month, up 2.1% from ₹13,573 crore in December 2022 to ₹13,856 crore in January. Compared to January 2022, SIP contributions rose 20.3%.

The number of SIP accounts was up by around 23% to 62.2 million in January over a year-earlier. Commenting on the latest numbers, Amfi’s chief executive N. S. Venkatesh said: “Encouraging SIP numbers indicate retail investors’ trust in mutual funds. We believe the SIP inflow momentum has and will continue to balance FII outflow in the market.”

Kavitha Krishnan, senior analyst—manager research, Morningstar India, said that FII selling was largely due to factors such as the discomfort around valuations, movement of FIIs to other emerging economies, and profit booking.

In equity, small-cap, large-and mid-cap, and multi-cap funds had net inflow of ₹2,256 crore, ₹1,902 crore and ₹1,773 crore, respectively. For several months, investors are flocking to small-cap funds following a correction in their valuations.

“With most investors making conscious investing decisions, their overall preference towards investing in dips is evident from the magnitude of flows into small- and mid-cap stocks, considering the Nifty Smallcap 100 was among the worst performers in December 2022. On an overall basis, the markets ended in the red in January, with most sectors witnessing negative returns except for information technology and auto sectors,” said Krishnan.

Debt MFs, (both open-ended and closed-end schemes), saw net outflows of ₹9,733 crore in January, but was sharply down from net outflows of ₹20,732 crore in December, led by outflows of ₹5,042 crore from liquid funds, ₹3,859 crore from short duration funds and ₹3,688 crore from overnight funds. In a sharp contrast with the trend of debt MF outflows, money market funds saw net inflows of ₹6,460 crore, while ultra-short duration funds saw inflows of ₹1,765 crore.