Mumbai: Investors in Indian equity mutual funds bought more last month, unfazed by the selloff that saw the nation’s $1.9 trillion market log its worst July in 17 years.
Stock plans received ₹8,110 crore ($1.2 billion), according to the Association of Mutual Funds in India. That’s an increase from ₹7,660 crore that the funds got in June and the highest in four months.
Indian stocks entered a correction this week as the lack of measures in the July budget to stimulate the economy and a tax on the super rich soured the mood. Local fund managers bought the dip, plowing a net $2 billion last month, helping negate sales of a similar magnitude by foreigners.
“The mutual fund industry is holding on," N.S. Venkatesh, chief executive officer at the Association of Mutual Funds in India, said on a conference call. “We saw inflows despite a difficult month, a sign of investors becoming more mature and holding their investments."
The ground realities — slowdown in the economy and the lingering stress in the nation’s credit markets — have long replaced the euphoria following Prime Minister Narendra Modi’s comfortable electoral win. Yet, monthly flows to stock funds from retail investors totaled ₹8,300 crore in July, up from ₹8,100 crore in June, Venkatesh said.
Contributions from savers who put in sums regularly, aiming to smooth out volatility through averaging, have soared from about ₹1,200 crore in 2014 and helped cushion the market against global shocks. The flows will persist as equities remain an “attractive option" amid expectations of a further reduction in bank deposit rates, Venkatesh said.