Strong flows not enough reason to buy equities: BofA-ML

The sharp inflow into equity mutual funds (MFs) isn’t sufficient reason for investors to buy equities. For, the valuations remain elevated, says Bank of America Merrill Lynch (BofA-ML), advising investors to “stay cautious in the near term”.

In May, equity schemes got inflow exceeding Rs 10,000 crore for a second month. In general, since May 2014, inflow has consistently been strong.

“As the markets run out of bottom-up arguments (such as earnings, valuations), investors increasingly point to the strength of domestic equity flows as justification for further upside,” say Sanjay Mookim and Nafeesa Gupta, analysts at BofA-ML. Their note says