Inflows into equity mutual funds surge, SIPs at all-time high. what to expect next

As per AMFI data, the overall flow mutual funds the market stood 14,046.98 crore in October 2022. Meanwhile, the net assets under management (AUM) came to approx. 39,50,323.28 crore as on October 31, 2022.

Mutual Fund Flows Market were driven by steady inflows into equity-oriented schemes and a slowdown in outflows into debt-oriented instruments.

Data shows debt market outflows were approx. Compared to the huge withdrawal of Rs 2,817.79 crore in October 65,372.40 crore in the month of September. Debt instrument outflows eased on strong inflows into liquid funds 19,084.60 cr vs an outflow in October 2022 59,970.30 crore in the last month.

FYERS Head of Research Gopal Kavalireddy said, “Mutual fund data for the month of October 2022 indicates net inflows of Rs 14,047 crore as compared to net outflow of Rs 41,404 crore for the previous month, mainly due to lower debt outflows.” schemes. Higher inflows of Rs 19,084 crore into liquid funds were the bright spot in the debt category as investors continued their redemptions from various duration funds due to rising interest rates. Floater funds including overnight, banking and PSU funds There was a huge withdrawal.”

Meanwhile, Kavita Krishnan, Senior Analyst- Manager Research, Morningstar, said the interest rate hike environment has been prevailing since May 2022, as a result of which investors are preferring to exit the debt market. equity, Macro indicators such as the rising current account deficit, driven by central bank measures to regulate the local currency, and rising import bills are factors that have likely had an impact on the interest rate landscape in India. Rising commodity, food and fuel prices have also had an impact on the economy.

Further, Priya Agarwal, Money Coach, LXME (Neo-Bank for Women) said, “Within the loan segment, most schemes saw a net outflow of funds, with a significant outflow from overnight funds. 7505 crore, followed by Low Duration Fund and Short Duration Fund. The move could be a result of the debt market becoming volatile due to the rising interest rate scenario.”

Talking about equity oriented schemes, the inflows were around 9,390.35 crore in October as compared to the inflow of 14,099.73 crore in September. Thematic funds, large-cap, smallcap and midcap funds contributed to the inflows in the latest month.

On equity mutual funds, Krishnan highlighted that large and mid-cap, mid cap and small cap funds also saw significant inflows during the month. Although the magnitude of net inflows has decreased slightly compared to September 2022, the decrease is likely driven by outflows. 8.29 crore by foreign portfolio investors. There also seems to have been some profit-booking by the investors as the market turned bullish in the month of October 2022.

The FYERS expert pointed out that inflows into equity MFs last month were fueled by several new fund launches. He added, “The total net inflows in the equity category since the beginning of this calendar year accounted for 151,482 crore, with 88,425 crore in the current financial year. This reflects the increasing risk appetite of investors with preference for equity investments.

Notably, on inflows into equity MFs, Aggarwal believes this way indicates that, despite market volatility, investors have turned equity-oriented with the aim of generating inflation-beating returns in the long run. I have continued to invest my money in schemes.

Also, SIP inflows hit an all-time high 13,040 crores — after being above 12,000 crore mark since May this year.

what is next?

According to Kavalireddy, during the current earnings season, operating and net profit margins of most companies were on the lower side due to low volume growth, high-cost inventory and weak demand. This could result in earnings downgrades by analysts across multiple sectors. Based on the Q2 results announced till date, the banking and financial sector is seen as a bright spot, with almost all public and private sector banks showing excellent growth.

The global environment remains volatile, said Morningstar’s Krishnan, largely driven by a number of factors, including geopolitical instability in Europe, slowdown in China and rising inflation in the US, despite Indian stock markets rising in the month of October 2022. There was an uptick in With a broad-based rally in all areas.

“India continued to be driven forward by an increase in private spending after a prolonged period of sluggishness. A pick-up in demand also boosted overall markets, as most sectors posted positive returns for the month of October,” he said. 2022. That said, challenges remain in the form of rising interest rates, high inflation and a depreciating rupee.”

While Kavalireddy said that while markets continue to be volatile as benchmark indices are currently placed at a very narrow distance from their lifetime highs, investors have reposed faith in the Indian stock markets and are investing in direct equity as well as systematic investments. Has continued to opt for equity investment since. Investment plan of mutual funds.

Disclaimer: The views and recommendations given above are those of individual analysts or broking companies and not of Mint.