Finally, its pouring money into equity MFs

Figure highest since first half of 2007-08

In the first half of this financial year, investment into equity mutual funds touched a seven-year high of Rs 33,000 crore. Through the past five years, the sector saw a shrinking investor base and outflows of about Rs 35,000 crore.

Investment in the April-September period is higher than that in any full financial year in the past, excluding 2005-06 and 2007-08, when inflows stood at Rs 36,700 crore and Rs 47,000 crore, respectively.

Between April and September this year, benchmark indices have rallied about 20 per cent, while the mid-cap index has gained about 35 per cent.

“The current period is similar to 2004-06, when fundamentals initiated a mid-cap bull run. With a single party drawing absolute majority and the fact that the new prime minister has shown a focus on administration and execution in the past, a major growth spurt in the economy is likely through the next three years. This is likely to drive corporate earnings and stock prices, offering reasonable returns to investors through three-five years,” said S Naren, chief investment officer, ICICI Prudential AMC.

The inflows into mutual fund schemes have translated into buying by mutual fund houses in the cash segment, which has often acted as a cushion during selling by foreign investors.

In the past six months, mutual funds have net-bought about Rs 17,000 crore of stocks. The buying follows selling to the tune of Rs 75,000 crore between 2010 and 2014.

“The Indian mutual fund sector might just see one of the best periods of its life cycle in the next five years. With the improved sentiment towards our country and the mutual fund sector in general, I am extremely bullish on investor participation, particularly, in mutual fund equity schemes,” said A Balasubramanian, chief executive of Birla Sun Life Mutual Fund.

According to data provided by the Securities and Exchange Board of India, about half a million equity folios (accounts to buy mutual fund units) have been opened so far this financial year. Following the global financial crisis of 2008,

about 12 million equity folios were closed.