Market correction brings record high equity MF inflows in July; up 81% from June

Mint

6 hours ago

Net inflows into equity mutual funds surged sharply in July, driven by a gush of money into new fund offers (NFOs) and a market correction, which prompted investors to step up allocations.
According to data from the Association of Mutual Funds of India (Amfi), net equity inflows hit a record high of ₹ 42,672 crore in July, up 81% month-on-month.
Of this, equity NFOs accounted for about ₹ 9,000 crore and continuing SIPs contributed roughly ₹ 25,000 crore, while fresh inflows into existing schemes were around ₹ 8000 crore, said Viraj Gandhi, chief executive officer (CEO) of SAMCO Mutual Fund.
He said nearly ₹ 7,400 crore of the ₹ 9,000 crore inflows into NFOs went into thematic funds. 'Large Asset Management Companies (AMCs) already have most traditional categories covered, so their new launches will tend to be thematic, explaining the surge in investor interest,' Gandhi added.
The Nifty 50 index fell 2.93% in July, while Sensex fell 2.9%. The Nifty Smallcap index and Nifty Midcap index fell 3.9% and 3.6%, respectively.
'The market has not done much in the last one month and yet we are seeing record inflows, which means investors are looking ahead and building positions for the next move,' said Gandhi.
'When uncertainties are less, confidence starts to move up, with investors looking at the longer term to take advantage of a correction,' said Akhil Chaturvedi, executive director and chief business officer at Motilal Oswal Asset Management Co.
Within equity schemes, sectoral and thematic funds saw the highest net inflows of ₹ 9,426 crore in July. This was followed by flexicap funds that saw inflows of ₹ 7,654 crore.
Net inflows into thematic funds were the highest since December last year, when it was at ₹ 15,332 crore.
Inflows into smallcap funds rose 61% sequentially to ₹ 6,864 crore in July, while net inflows into midcap funds increased 38% to ₹ 5,182 crore.
Inflows into smallcap and midcap mutual funds is likely to continue, said Juzer Gabajiwala, director at Ventura. 'Over the past five years, the market capitalization of smallcap companies has risen significantly and Indian investors, now more informed, have noticed that smallcaps and midcaps have fallen more sharply than largecaps, and this correction has brought valuations closer to reasonable levels, prompting more investors to bet on them,' he added.
India's total systematic investment plan (SIP) contributions increased to a record ₹ 28,464 crore in July, witnessing a 2.5% increase sequentially.
The number of new SIP accounts opened during July were 6.8 million and the matured accounts during the month were at 4.3 million, as per Amfi data. The total number of SIP accounts were at 94.4 million, indicating a net growth of 2.5 million SIPs during July, said Venkat Chalasani, CEO of Amfi.
Flows into equity mutual funds will hinge on market movements, said Chirag Mehta, chief investment officer (CIO) at Quantum Mutual Fund. 'With markets remaining largely range-bound for a year, volatility and economic uncertainty could weigh on sentiment, but continued gains may keep inflows steady,' Mehta said.
'When uncertainties are less, confidence starts to move up, with investors looking at the longer term to take advantage of a correction,' said Akhil Chaturvedi, executive director and chief business officer at Motilal Oswal Asset Management Company.