Do­mes­tic bulge bracket heft TRUMPS FPI SELL­ING

In­vestors have pumped in close to `62,000 crore into MF schemes in Au­gust

Financial Chronicle - - FRONT PAGE - RAVI RAN­JAN PRASAD

IN­VESTORS are ex­cited that bench­mark eq­uity indices Nifty 50 and BSE Sen­sex have re­gained 10,000 and 32,000 lev­els, re­spec­tively. What makes the rally dou­bly thrilling is the fact that the mar­ket is sus­tain­ing the high lev­els even as for­eign in­vestors are sell­ing. Do­mes­tic in­sti­tu­tional in­vestors com­pris­ing mu­tual funds (MFs), in­sur­ance com­pa­nies, pen­sion funds and bank trea­sury have propped the mar­ket.

For ex­am­ple, MFs have made net in­vest­ment of Rs 2,254.90 crore in eq­uity till Septem­ber 8. On other hand, for­eign in­vest­ment stood at a neg­a­tive Rs 339 crore. For­eign port­fo­lio in­vestors (FPI) sold equities worth Rs 3,507 crore while they put in Rs 3,169 crore in debt in the month so far.

An­a­lysts said Nifty 50 could top its life­time high of 10,138, seen last on Au­gust 2, 2017, as there are sus­tained cash flows into eq­uity mu­tual funds.

In­vestors have pumped in close to Rs 62,000 crore into MF schemes in Au­gust, driven by eq­uity and money mar­ket funds. With this, to­tal net in­flow into MF by schemes has risen to Rs 2.2 lakh crore for the first five months (April-Au­gust) of the on­go­ing fis­cal, as per the lat­est data avail­able with the As­so­ci­a­tion of Mu­tual Funds in In­dia (Amfi).

“The In­dian mu­tual fund in­dus­try has been wit­ness­ing phe­nom­e­nal growth since 2014. The last three years and es­pe­cially 2016 have been char­ac­terised by large in­flows into eq­uity and bal­anced funds, with in­creas­ing par­tic­i­pa­tion from retail and HNI in­vestors,” said Kaus­tubh Be­la­purkar of Morn­ingstar.

The lat­est in­flow has been mainly driven by con­tri­bu­tion from liq­uid funds and money mar­ket funds. Be­sides, in­vestors con­tin­ued to main­tain bullish stance on the eq­uity schemes.

Inigo Men­doza, head of pri­vate bank­ing, Credit Suisse In­dia, said, “We are ex­pe­ri­enc­ing un­prece­dented do­mes­tic flows into fi­nan­cial as­sets in In­dia, away from phys­i­cal as­sets such as gold and real es­tate in­vest­ments. As the econ­omy con­tin­ues to for­malise, we ex­pect do­mes­tic in­flows to con­tinue in the fi­nan­cial mar­kets.”

In Au­gust when eq­uity bench­marks traded in a nar­row range af­ter hit­ting all-time high lev­els, MFs in­vested Rs 17,941.11 crore in eq­uity, ac­cord­ing to the Se­cu­ri­ties and Ex­change Board of In­dia (Sebi).

But for the do­mes­tic fund buy­ing, mar­ket would have fallen with mas­sive for­eign funds sell­ing in Au­gust. For­eign in­vestors had sold shares worth Rs 12,770 crore last month. Data for in­sur­ance com­pa­nies, pen­sion funds like EPFO and Na­tional Pen­sion Sys­tem and bank’s trea­sury are not re­ported but they have been also buy­ing, said bro­kers.

For­eign port­fo­lio in­vestors were net sellers in eq­uity in Au­gust by Rs 12,770 crore and they were net sellers also in the past eight out of 9 ses­sions in Septem­ber, as per NSDL data. Among the for­eign in­vestors, while the ex­change traded funds are sell­ing, the hedge funds are grad­u­ally see­ing buy­ing, a bro­ker said.

Deven Chok­sey, man­ag­ing di­rec­tor, KR Chok­sey Shares & Se­cu­ri­ties, said, “Right now, stock spe­cific buy­ing by do­mes­tic in­sti­tu­tional in­vestors is be­ing ob­served. Be­sides mu­tual funds, in­sur­ance com­pa­nies are reg­u­lar buy­ers.” Bank trea­sury has also seen im­prove­ment in vol­umes but it is not dis­tinct.”

Banks are flush with funds af­ter de­mon­eti­sa­tion and some money is likely to find its way into the eq­uity mar­ket in the ab­sence of ro­bust credit de­mand.

For­eign port­fo­lio in­vestors were net sellers on Wed­nes­day by Rs 826.77 crore, while do­mes­tic in­sti­tu­tional in­vestors were net buy­ers by Rs 725.90 crore as Nifty set­tled lower by 13.75 points at 10,079.30 while Sen­sex gained 27.75 point to close at 32,186.41. The NSE in­dex touched a high of 10,131.95, just six points short of ear­lier all­time high. The mar­ket seemed to be un­der pres­sure of profit-tak­ing af­ter four con­sec­u­tive ses­sions of gains as there were 19 ad­vances to 32 de­clines in the Nifty 50 bas­ket.

Sameet Cha­van, chief an­a­lyst, tech­ni­cal and de­riv­a­tives, An­gel Broking, said, “The in­dex gained some mo­men­tum in the midst of the ses­sion to march grad­u­ally to­wards the re­cent high of 10,137.85. But some de­cent profit book­ing dragged the in­dex lower from a kiss­ing dis­tance. Go­ing ahead, we would ex­pect some kind of con­sol­i­da­tion in a range of 10,000 – 10,138 with slightly higher volatil­ity.”

While MFs have raised their cash lev­els in the in­di­vid­ual fund cat­e­gories, the ro­bust flows are con­tin­u­ing and need to be de­ployed which has led to net buy­ing by do­mes­tic in­sti­tu­tions while for­eign funds are sell­ing.

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