Equity MF flows remain robust despite corrections

Investors pumped in Rs 10,600 crore into equity schemes last month

The corrections in stock markets through the past few months have failed to dampen the appetite of retail investors for equities. Despite key stock indices seeing a sharp correction since March, robust inflows into equity schemes have continued unabated. In April, investors pumped in about Rs 10,600 crore, the most in nine months. Gross sales of equity schemes (including equity linked saving schemes) stood at Rs 15,400 crore, the third-highest since the National Democratic Alliance (NDA) government came to power at the centre.

A correction of about 3,000 points in the 30-share index Sensex, industry executives say, was treated as an opportunity by many investors. G Pradeepkumar, chief executive officer of Union KBC Mutual Fund, says, “Many investors who were left out of the last year’s rally feel it’s a good time to get into the markets. There are very few investors who want to redeem at this juncture. They understand for India, the fundamental story remains intact. I believe the momentum of inflows will continue.”

In April, overall new addition of investor accounts in the equity segment stood at about 300,000, raising the number of folio counts to 31.98 million. This was the 12th straight month to record a rise in equity folios.

Nimesh Shah, chief executive of ICICI Prudential Mutual Fund, says, “Indians continue to remain underinvested in equities. The recent corrections are technical and offer brilliant opportunities for investors to buy, and they are doing so. The stock markets are not terribly overvalued and investors need not be worried. It’s a fact that these are volatile times and 2015 will continue to see volatility. But that should not dampen investors.”

Through the past few months, fund managers have adopted a ‘buy-on-dips’ strategy, which has worked well so far. With strong inflows in equities, fund managers are not facing a crunch of funds. Through the past year, investors have pumped in about Rs 85,000 crore of fresh investments (net of redemptions).

A Balasubramanian, chief executive of Birla Sun Life Mutual Fund, says, “The conviction and understanding about equities among Indian investors continue to remain strong. The outlook remains positive. April witnessed strong flows and so far this month, there is good amount of traction. There is nothing that suggests there is a significant decline in inflows.”

As of April 30, the mutual fund sector offered about 440 equity-related schemes and managed assets worth Rs 3.45 lakh crore.