India logs over Rs 10,000 cr of monthly mutual fund inflows in market boom

The record run in India’s equity market is finding strong support from retail mutual fund investors, who are pumping more than a billion dollars a month into stock plans. 

Inflows into mutual funds from regular contributions through systematic investment plans, or SIPs, hit an all-time high of 103.5 billion rupees ($1.4 billion) in September, according to data from the Association of Mutual Funds in India.

Asset managers collected 82.8 billion rupees in 13 new funds launched in September as rising stocks boost the appeal of equity investments for individuals versus low-yielding bank deposits. An unprecedented 2.7 million new accounts were registered in September.

The record-high participation via SIPs underscores a “structural trend of savings shifting to equities,” Gaurav Patankar, head of emerging-market equity strategy at Bloomberg Intelligence, wrote in a note. The surge in these flows, along with strong local institutional buying, is helping in “mitigating volatility from foreign outflows,” he wrote.  

India’s benchmark NSE Nifty 50 Index has gained nearly 30% this year and is the best performer among major equity markets in the Asia Pacific. Policy rates at a record low and ample liquidity are protecting the downside, while a ramp up in vaccinations and a revival of consumer demand are improving earnings prospects for companies.