Equity mutual fund inflow hits 5-month low in Oct

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Equity mutual funds witnessed a net inflow of Rs 6,015 crore in October, the lowest in the last five months, amid a rally in the stock market following a series of reform measures taken by the government.

According to data by the Association of Mutual Funds in India (Amfi), open-ended equity schemes witnessed an infusion of Rs 6,026 crore, while there was a small outflow of Rs 11 crore from close-ended equity plans, translating into a net inflow of Rs 6,015 crore in October.

In comparison, net inflows in equity and equity-linked saving schemes stood at Rs 6,489 crore in September. Such inflows stood at Rs 9,090 crore in August, Rs 8,092 crore in July, Rs 7,585 crore in June and Rs 4,968 crore in May.

"Net inflows continue to pour into the equity-oriented mutual fund schemes tracking the surge in the domestic markets. Through the month of October, the category received a net inflow of Rs 6,026 crore. Though slightly lower than the net inflow of Rs 6,609 crore in the month of September.

"The positive inflow indicate building up of a positive investment trend. Series of steps taken by the government in recent times to boost the domestic economy had improved sentiments and helped the markets to surge. This has helped investors slowly gain confidence and get back to investing," said​Himanshu Srivastava, senior analyst manager research, Morningstar Investment Adviser India.

Going ahead, experts believe that equity markets would perform better in the coming months due to positive initiatives taken by the government, which will drive further inflows in mutual funds.

Despite the decline in inflows, the asset base of equity mutual funds increased to Rs 7.9 lakh crore in October from Rs 7.6 lakh crore in the preceding month. Meanwhile, BSE benchmark Sensex had gained nearly 4 per cent in October.

Overall, mutual fund schemes witnessed an inflow of Rs 1.33 lakh crore last month as compared to the redemption of Rs 1.52 lakh in September. The positive inflow could be attributed to debt-oriented schemes, which saw an inflow of 1.2 lakh crore.

Among debt-oriented schemes, liquid funds -- with investments in cash assets such as treasury bills, certificates of deposit and commercial paper for shorter horizon -- saw an infusion of Rs 93,203 crore last month as compared to an outflow of Rs 1.4 lakh crore in September.

The inflow has pushed the asset base of the mutual fund industry, comprising 44 players, by more than 7 per cent to over Rs 26 lakh crore at October-end from Rs 24.5 lakh crore at the end of September. 

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