Amfi data released for the month of March said investors poured in a net Rs 9,115.12 crore, against the previous month’s withdrawal of Rs 4,534.36 crore from equity-oriented funds, thanks to buying in all but two categories. Equity mutual funds saw a total inflow of Rs 28,023.38 crore and outflows of Rs 18,908.27 crore, both of which were significantly lower than last month’s figure.
“Net flows were witnessed across equity fund categories. While it’s too early to make any conclusions, it seems like equity investors waiting on the sidelines for a market correction have started making allocations, taking a long-term investing view on equities. Additionally, the quantum of redemptions were lower for the month, suggesting profit booking/reallocation to other asset classes slowed down,” said Kaustubh Belapurkar, Director – Manager Research, Morningstar India.
Thematic and sectoral funds saw the biggest inflow at Rs 2,009.35 crore, while tax saving ELSS funds and midcap funds saw net buying of over Rs 1,500 crore. Flexi cap funds and focussed funds also received an inflow of over 1,000 crore.
SIP inflows in March rose to Rs 9,182.42 crore from Rs 7,528.14 crore in the previous month. Total number of SIP folios saw a marginal jump to 3.72 crore from 3.62 crore. The assets under management (AUM) from SIPs rose to Rs 4.27 lakh crore, from 4.21 lakh crore in January.
The sharp jump in the SIP contribution is due to roughly about Rs 500 crore collection for February being included in March’s data as the last two days of February were holidays and no collection were recorded, said NS Venkatesh, Chief Executive at Amfi.
Thanks to the massive inflows, domestic institutional investors, which mostly comprise mutual fund managers, bought a net Rs 5,204.2 crore worth of stocks, against selling of Rs 16,358.10 crore in the previous month. FIIs were also net buyers in March and invested Rs 10,482 crore in the equity markets, as per NSDL data.
FY 20-21 has been net negative for equity fund flows, given the eight months of outflows from July 2020 to Feb 2021 as investors looked to book profit and rebalance portfolios to other asset classes after markets bounced back sharply from March lows and made new highs.
Debt mutual fund schemes, however, saw some outflow during the month as they cumulatively witnessed net withdrawal of Rs 52,528.07 crore. Investors withdrew a net Rs 19,383.68 crore from liquid funds and Rs 15,847.34 crore from low duration funds.
Quarter-end withdrawal is a usual phenomenon as large investors take out money to pay salaries, deposit taxes and for other corporate purposes. Banks also withdraw the funds so that they don’t have to provide capital against such investments, said Venkatesh.
The total mutual fund AUM as on March 31 declined to Rs 31,42,763.50 crore even as there was a net outflow of Rs 29,745.41 crore. The rise in AUM was largely due to withdrawal in debt funds. BSE Sensex climbed 0.83 per cent during March, while BSE Midcap climbed 1.01 per cent and BSE Smallcap added 2.45 per cent.