Equity mutual funds may have seen positive inflows in August

This is a positive development for fund houses as they saw close to Rs 1, 900 crore flowing out of equities in July

In August, India’s retail investors seem to have mustered the courage to enter the equity markets through mutual funds, though not in a major way. Though data on the overall industry’s inflows aren’t available yet, officials in the sector say flows have been positive; they estimate these at Rs 300-400 crore, compared to continuous outflows through the last two years.

Though the inflows aren’t much, these have boosted the sentiment among officials who have been complaining about falling equity sales. If inflows turn out to be in positive territory, it would be only the third such occasion in the last 15 months. The Association of Mutual Funds in India is likely to announce the monthly statistics later this week or early next week.

The inflows came at a time when India’s key stock market indices remained highly volatile. At one point, benchmark indices lost about 10 per cent, before bouncing back, aided by domestic institutional buying. It ended the month about 3.7 per cent lower than in July.

Chief investment officers (CIOs) in the sector say some investors might have made good use of the sharp volatility in Indian markets and pumped in fresh money. “They (investors) largely remained invested in markets, despite the carnage in August,” said the CIO of a large fund house.

The chief marketing officer of another fund house confirmed this. “There had been redemptions, but not to the extent we saw in the earlier months.” In July, there was a net outflow of Rs 1,827 crore from equity schemes.

However, the officials refrained from saying whether this trend would sustain, given the uncertainties on India’s macroeconomic environment.

Owing to fresh flows in August, fund managers went ahead with a buying call for most of the month, buying stocks worth Rs 1,607 crore, the first net buying in last 14 months. The significant portion of these investments came from the cash positions fund houses had been sitting on for some time.

Overall, assets under management in the equity segment stand at about Rs 1.63 lakh crore.