Sensex slips; flows into equity funds rebound

India stocks fell, after fluctuating between gains and losses throughout the session, ahead of company earnings that begin this week and as investors focus on national polls.

The benchmark S&P BSE Sensex Index slipped 0.4% to 38,700.53 at the close in Mumbai. The gauge on Friday completed a seventh consecutive week of gains, its longest run of weekly wins in 14 months, data compiled by Bloomberg show. The NSE Nifty 50 Index fell 0.5% yesterday.

The first round of voting in India’s general election starts on April 11, while Infosys kicks off the quarterly earnings season as of Friday.

“Mid-sized technology companies and old private sector banks will be the theme this week given the two important deals in the segment. One, the proposed merger of Lakshmi Vilas Bank with Indiabulls Housing, and second, NIIT with Baring Private Equity,” Chokkalingam G, managing director of Equinomics Research & Advisory, said in Mumbai.

“Earnings will remain in focus though investors aren’t expecting big surprises,” he says.

Thirteen of the 19 sector indexes compiled by the BSE declined, led by a gauge of realty companies Reliance Industries contributed the most to the index decline, decreasing 1.9%. Yes Bank had the largest drop, falling 2.7%.

Infosys posted the biggest boost to the index and had the largest gain, advancing 1.4%.

NIIT jumped 20% after company agreed to sell 30% stake in unit NIIT Technologies to Baring Private Equity Asia Lakshmi Vilas Bank surged by its daily limit on proposed merger with Indiabulls Housing.

Meanwhile flows into Indian equity mutual funds hit a five-month high in March, induced by the rally that recently lifted the $2.2tn stock market to a record.

Stock funds took in about Rs118bn ($1.7bn), the highest since October, and more than double over the previous month, data from the Association of Mutual Funds in India, or AMFI, show.

Indian equities posted their best month in three years in March as foreign investors ploughed more than $6bn – the most since September 2010 – on the prospect of Prime Minister Narendra Modi winning a second term in elections starting this week and as a dovish shift by global central banks revived demand for riskier assets.

“Volatility has come down a little and markets have shown a bit of an uptrend, all of which rubbed off on mutual-fund flows,” N S Venkatesh, chief executive officer at AMFI, said in a conference call yesterday. “The sentiment is positive.”

Robust liquidity from domestic institutional investors have helped buffer the market against outflows sparked by global shocks in recent years. This backstop had weakened following a drop in flows to equity plans for four months through February.

Mutual fund and insurance firms yanked out a combined Rs139.3bn from shares last month, the most in three years, even as India emerged as Asia’s top destination for overseas money this year. Total assets rose 3% month-on-month to Rs23.8tn. Money-market funds witnessed outflows of Rs513.4bn in March, the most since December, typically seen at end of quarter and fiscal year.