MFs counter FPI outflow, pour in Rs 17,000 crore into equities in Oct

Domestic mutual funds (MFs) remain a key support for the domestic market amid continued selling by foreign portfolio investors (FPIs) amid rising bond yields in the US.

In October, MFs deployed close to Rs 17,000 crore into the equity market even as FPIs pulled out a net of Rs 22,100 crore, the second most monthly outflows for calendar 2023 after January. Overseas funds stepped up selling after the yield on the 10-year US Treasuries topped 5 per cent for the first time since 2007.

Meanwhile, MFs' equity investments remained on the higher side even though they were down for two straight months. MFs equity investments, which had surged to a 15-month high of Rs 25,500 crore in August 2023, had come down to Rs 20,840 crore in September. In the financial year 2023, the average monthly deployment stood at Rs 14,150 crore, shows data from the Securities and Exchange Board of India (Sebi).

The above-average deployment by MFs indicates that inflows into equity schemes remained strong even as the market corrected in October. Key benchmark indices — the Nifty and the Sensex — had ended the month down 2.8 per cent and 2.9 per cent, respectively.