Mumbai: Net inflows into equity mutual fund schemes crashed to 1,690.48 crore in November, the lowest since 320 crore seen in June 2016, as soaring stocks prompted investors to cash out.

The November figure, released by the Association of Mutual Funds in India (Amfi) on Monday, is 79.91% lower than the 8,414 crore net inflows seen in November 2018 and 72% lower than 6,037.78 crore in October 2019.

Equity mutual fund redemptions that stood at 11,025.26 crore in October leapt to a 20-month high of 16,216.66 crore in November, a month that saw benchmark equity indices rising 1.6%.

Investors booked profits as markets touched record highs in November, leading to a sharp fall in net inflows, said N.S. Venkatesh, chief executive officer of Amfi. “Investors are waiting on the sidelines for the markets to be at new lows so that they can enter once again," Venkatesh said in a conference call.

Kaustubh Belapurkar, director of fund research at Morningstar Investment Adviser India, too attributed the decline in net inflows to profit-booking. “This is not a new phenomenon. Even earlier, equity mutual fund schemes have seen redemption pressure whenever stock markets rallied," he said. Belapurkar does not see a structural slowdown in net inflows into such schemes, though there could be headwinds for the stock markets.

In November, foreign institutional investors pumped in $2.9 billion, keeping the stock markets buoyant. Meanwhile, domestic institutional investors, which include mutual funds and insurance companies, sold equity shares worth 7,970.29 crore, the steepest sell-off in eight months.

(Graphic: Paras Jain/Mint)
(Graphic: Paras Jain/Mint)

The total amount collected through systematic investment plans (SIPs) in November was at a record high of 8,272.87 crore, as against 8,246 crore in October. SIPs allow people to invest fixed amounts in mutual fund schemes at fixed intervals.

“Money put into goal-based, long-term SIPs by retail investors continues to grow steadily, with SIP asset under management (AUM) at an all-time high of 3.12 trillion," Venkatesh said. “Equity net inflows have come down sharply in November, partly because of investors booking profits, but the overall mutual fund industry AUM reached an all-time high of 27 trillion."

Net inflows of 20,649 crore into overnight funds came in at the highest level for the fiscal in November, exceeding net inflows of 6,938 crore into liquid funds for the first time ever.

“The rise in net inflows into overnight funds compared to liquid funds is clearly a result of the seven-day exit load on liquid funds mandated by the Securities and Exchange Board of India," said Dwijendra Srivastava, head of fixed income at Sundaram Asset Management Co.

Neil Borate contributed to this story