Sunday, December 10

India equity mutual fund inflows to remain soft in current quarter- industry body

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BENGALURU — Inflows in India’s equity mutual funds dropped more than 16% in June compared with May and are likely to remain weak in the current quarter due to worries over interest rates hikes and inflation, an industry body said on Friday.

Mutual funds that invest in equities showed a net inflow of 154.98 billion rupees ($1.96 billion) in June, compared with 185.29 billion rupees in May, data published by the Association of Mutual Funds in India (AMFI) showed.

“Markets in June were very volatile and showed a negative trend. Despite that we have positive inflows and retail investors continue to show faith in equity markets through mutual fund route,” said NS Venkatesh, chief executive officer at AMFI.

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“Retail investors will wait for (positive) economic data and for inflation to come down before making further allocations,” Venkatesh said, adding that inflows in equity mutual funds are expected to be about 130 billion rupees to 150 billion rupees at least until September.

Indian benchmark indexes NSE Nifty 50 and S&P BSE Sensex fell for a third straight month in June, dropping nearly 5% amid huge volatility.

Foreign investors sold $6.44 billion worth of Indian shares in June, the most since March 2020, compared with a net selling of $5.18 billion in May, according to Refinitiv Eikon data.

Equity mutual funds saw record inflows of 284.63 billion rupees in March, but have dropped since then due to worries over the Russia-Ukraine war, red-hot inflation and recession fears due to aggressive monetary policies by major central banks.

Indian benchmark indexes, which gained over 20% last year, are down more than 6% this year.

Meanwhile, contribution from Systematic Investment Plans (SIPs), popular among retail investors for allowing investment of a fixed amount regularly in schemes, stood at 122.76 billion rupees as of June end, compared with 122.86 billion rupees in May.

($1 = 79.2700 Indian rupees) (Reporting by Nallur Sethuraman, additional reporting by Gaurav Dogra in Bengaluru; Editing by Amy Caren Daniel)