Mutual fund equity buys hit six-month high in September, shows data

Equity investments by domestic mutual funds (MFs) climbed to a six-month high of Rs 20,500 crore in September. This substantial investment suggests that fresh flows into equity schemes by retail investors remained strong, even as markets retreated from their record highs during the month's latter part due to rising US bond yields and oil prices.

The MF industry has not yet released the inflow data for September.

In the first four months of FY24, MF investments in equities were muted owing to profit-booking by investors. However, the deployment gained momentum in August as investors channelled over Rs 20,000 crore into equity schemes.

The robust inflows in September, as inferred from the MF deployment data, occurred despite concerns about high valuations following a significant market rally from the lows in March, especially in the mid- and small-cap sectors.

Last month, the market surged during the first half, with the Sensex increasing for 11 consecutive sessions – its longest winning streak since 2007. However, in the month's latter half, the markets gave back most of their gains as foreign portfolio investors (FPIs) accelerated their selling. Market observers noted that, as seen previously, MFs increased their buying during the FPI sell-off, helping to mitigate the market's decline.