MFS invest ₹39,500 cr in equities in H1 2020
NEW DELHI: Mutual funds net invested nearly ₹39,500 crore in the stock markets in the first six months of 2020, more than fourtimes the amount infused in the year-ago period, as volatility and correction in the broader markets provided a good investment opportunity for investors.
Further, consistent SIP (systematic investment plan) inflows into equity funds gave fund managers a healthy stream of capital to keep buying quality companies, experts said.
This comes in the backdrop of the coronavirus pandemic related disruptions, a sharp slowdown in economic activity across the globe and a steep sell-off in equities in March 2020.
Overall, mutual funds (MFS) have made a net investment of ₹39,478 crore in stocks during January-june 2020, much higher than the ₹8,735 crore invested in the first six months of 2019, latest data available with the Securities and Exchange Board of India (Sebi) showed. Of the total, more than ₹30,000 crore was invested in March alone, when equity markets witnessed a sharp sell-off.
“The volatility and correction in the equity markets has provided good investment opportunity for investors,” said Himanshu Srivastava, Director- Manager Research at Morningstar India. He further said despite challenges, flows into equity-oriented mutual funds have been good this year, displaying a more mature investor behaviour wherein they are looking at corrections as an opportunity rather than threat.
Consequently, good flows into the funds and attractive valuations have enabled mutual fund to park more investments into the market and capitalise on this investment opportunity, he added.
Bajaj Capital said the over four-times higher investment during the six months ended June 30, 2020 could be explained by the rising popularity of asset allocation funds and such funds using the sharp fall of March to increase equity exposure at lower levels as valuations turned attractive.
MFS invested a net ₹1,384 crore in equities in January this year, ₹ 9,863 crore in February, a staggering ₹30,285 crore in March, while they pulled out ₹7,965 crore in April. Reversing the selling trend in May, they put in ₹6,522 crore, but once again withdrew ₹612 crore in June, the data showed.