MFS on buying spree for 2nd month in a row, infuse ₹5,526 cr in equities
NEW DELHI: Continuing their buying spree for the second straight month, mutual funds invested ₹5,526 crore in stocks in April with fund managers sensing opportunities after some consolidation in the market. Investment by mutual funds (MFS) in equities will continue in coming months seeing the increase in user growths as multiple fintech players are entering into this space, Kaushlendra Singh Sengar, founder and CEO at INVEST19, said.
Alok Aggarwala, chief research officer, Bajaj Capital, is also of the view that this bullish stance to continue as valuations moderate somewhat post FY21 earnings and the consolidation provides investors with an opportunity to accumulate equities. Another factor driving this stance is the softening of bond yields from March onwards, forcing investors to flock to equities in search of higher returns, he added.
According to Sebi data, MFS put in a net amount of ₹5,526 crore in equities in the month of April, much higher than a net sum of ₹4,773 crore invested in March. This was the first such fund infusion by MFS in 10 months.
Prior to the inflows, mutual funds had been withdrawing money from equities since June 2020, data available with the Securities and Exchange Board of India (Sebi) showed.
“We have witnessed 15.8% monthly investment growth by mutual funds into equities last month as volatile stock market pushed investors to invest via equity mutual funds to reduce risk,” Sengar said.
Alok Aggarwala, chief research officer, Bajaj Capital, said mutual fund flows are generally a reflection of investor flows in the respective mutual fund schemes. Domestic investors had been taking out money from equity mutual fund schemes since July 2020 and March 2021 was the first month when the trend changed. In addition, spike in SIP flows was witnessed in March rising to ₹9,182 crore from ₹7,528 crore in the preceding month. Hence, the positive flow by mutual funds in equities was witnessed in March, he said.
Though the data is not yet out, but this trend of net inflow in equity mutual fund schemes seems to have continued in April 2021 too, leading to positive flows by mutual fund, he added.
“The month of April witnessed a surge in the number of Covid-19 cases that lead to some minor corrections in the markets, however this was followed by quick recoveries as well. Mutual funds used this fall in the market to buy new stocks resulting in increased inflow in the equities even in the month of April-2021,” Gautam Kalia, Head - Investment Solutions, Sharekhan by BNP Paribas, said.