Even as the Sensex hit record high in October, inflows into equity mutual fund schemes declined 52% in the month.

Net inflows into equity mutual fund schemes fell to 6037.78 crore in October from 12622 crore a year ago, according to data released by Association of Mutual Funds of India (Amfi) on Friday. These schemes saw an inflow of 6728.02 crore in September.

Graphic by Paras Jain/Mint
Graphic by Paras Jain/Mint

After touching fresh highs, the Sensex had gained 3.78% in October, its best monthly performance this financial year. The Nifty gained 3.51% in October against 4.09% in September.

Domestic institutional investors (DIIs), which include mutual funds and insurance companies, invested 4,675.37 crore in Indian shares in October. Foreign institutional investors (FIIs) bought Indian shares worth $2.06 billion in October, higher than last month’s purchase worth $954.62 million.

Typically, lower interest rates in the US lead to an inflow of foreign funds into emerging markets, considered as risky assets.

The US Fed had reduced interest rates by 25 basis points in October and signalled a pause in further cuts unless the economic outlook changes materially.

During the month, inflows from systematic investment plans (SIPs) saw a marginal decline. The total amount collected through SIPs stood at 8246 crore in October against 8,262.94 crore in September. SIPs allow people to invest a fixed amount in a mutual fund scheme periodically at fixed intervals.

“SIP asset under management (AUM) crossing the 3 trillion landmark for the first time ever and the continual rise in SIP accounts are a positive reflection of disciplined approach adopted by the retail investor fraternity," NS Venkatesh, chief executive, AMFI said. “We expect equity markets to perform better in the coming quarters, as the positive impact of government initiatives trickles down in the economy, driving further inflows in mutual fund."

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