Flows into Indian equity mutual funds in May rebounded from the smallest in 31 months as Prime Minister Narendra Modi’s comfortable electoral win spurred appetite for risk assets.

Stock plans took in 5,410 crore ($778 million), according to the Association of Mutual Funds in India (Amfi). That’s an increase from 4,610 crore that the funds got in April, the least since September 2016, data compiled by Bloomberg show.

Sentiment for Indian assets has improved amid expectations Modi’s return to power with a stronger mandate will enable him to take measures to boost a sagging economy. The S&P BSE Sensex of shares capped its third straight month of gains in May, the rupee is near a two-month high and benchmark bond yields are hovering above 18-month lows.

“As elections are behind us, positive factors of low inflation and falling interest rates will increase inflows," N. S. Venkatesh, chief executive officer at Amfi, said in a conference call.

Funds that invest in mid- and small-cap stocks contributed 2,700 crore, or about half the month’s inflow, Amfi data show. Venkatesh said flows to this group of shares may increase as investors bet “on the strong earnings potential of some mid-sized firms."

The total assets under management stands at 25.43 trillion as against 25.27 trillion in April 2019.

The Amfi data also revealed that money-market/liquid funds got about 72,500 crore in May versus 96,200 crore in April, while overnight plans saw an inflow of 2,350 crore compared with 95.74 crore in April.

Hybrid funds, which hold both stocks and bonds, posted an inflow of 1,270 crore versus an outflow of 1,610 crore.

Amfi didn’t provide comparative numbers as it changed the way it reports monthly flows data to comply with market regulator’s rules on re-classification of mutual funds.


This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.

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