MFs' equity buying exceeds Rs 4 trillion in 2024 for the first time

Mutual funds’ (MFs) equity buying jumped over twofold in 2024 to top Rs 4 trillion for the first time. The sharp rise comes after two back-to-back years of over Rs 1.5-trillion deployment.

 

MFs have the largest institutional buyers in the equity market in two of the last three years — 2022 and 2024. In 2023, they were only slightly behind foreign institutional investors (FIIs). 

 

The sharp surge in equity buying by MFs has come on the back of record inflows into equity and hybrid MF schemes. The consistent systematic investment plan (SIP) inflows have also added to the buying power of MFs.

 

As of November, active equity schemes had raked in Rs 0.5 trillion from investors in 2024. In comparison, the inflows stood at Rs 1.6 trillion in the whole of 2023.

 

The surging equity buying capacity of MFs has proven to be a key support for the market during phases of heightened FII selling.

 

"Domestic institutional investors (DII) were strong buyers in the equity secondary market while foreign portfolio investors (FPIs) turned net buyers at the margin. Monthly SIP flows in MFs continue to see secular growth and crossed Rs 25,000 crore in October, 2024. Notably, MFs contributed around 80 per cent of net flows by DIIs in 2024,” Mirae Asset MF stated in a report.

 

The surging MF inflows have also allowed the market to absorb record issuances of fresh equity last year.

 

"The year 2024 witnessed record primary issuances (Rs 3.4 trillion). We may see this momentum going into 2025 and may keep up with the demand, given the strong pipeline,” the report added.