India equity mutual fund inflows rise to 1-year high in March – industry data

Inflows into Indian equity mutual funds jumped 31% sequentially to 205.34 billion rupees ($2.51 billion) in March, the highest in 12 months, data from the Association of Mutual Funds in India (AMFI) showed on Thursday. The rise in inflows offset some of the pressure on markets, which witnessed sustained selling by foreign investors. While Foreign Portfolio Investors (FPIs) turned buyers in March, the figure was skewed by U.S. firm GQG Partners’ $1.87 billion investment into Adani group stocks.

FPIs offloaded 262.10 billion rupees worth of equities in the first three months of 2023. The benchmark has fallen over 2% so far this year despite the recent buying streak.

“From a low of about 22.50 billion rupees in November, the net inflows into equity funds have been steadily increasing every month,” said G Pradeepkumar, chief executive of Union Asset Management Company. He added that steady inflows augur well for the future of the equity markets.

Small-cap funds accounted for most of the investments at 21.29 billion rupees, while inflows into large-cap funds nearly tripled to 9.11 billion rupees in March from 3.55 billion rupees in the previous month.

Contributions to systematic investment plans (SIPs) – in which investors make regular payments into mutual funds – rose over 4% to a record 142.76 billion rupees from 136.86 billion rupees. Over 700,000 new SIP accounts were opened in March.

SIP contributions had fallen marginally in February after hitting a fresh record in each of the previous six months, data showed.

“A robust SIP book aided inflows into equity schemes,” said Ajaykumar Gupta, chief business officer at Trust Mutual Fund. SIP contributions hit nearly 1.91 trillion rupees since the start of 2022, higher than foreign outflows into Indian equities of 1.39 trillion rupees over the same period.

Liquid funds – those that mature in a short duration of 91 days – logged outflows of 569.24 billion rupees, the most since September 2022, according to AMFI.

The rise in outflows from debt-oriented funds, a typical phenomenon at the end of a calendar or financial year, was driven by rising redemptions and portfolio movements from short-term debt to the longer end of the yield curve, analysts said.

The mutual fund industry, including debt, equity, hybrid and other schemes, logged a total net outflow of 192.64 billion Indian rupees ($2.36 billion), compared to inflows of 95.75 billion rupees in February, AMFI data showed.

The average assets under management fell 1.6% to 40.05 trillion rupees from 40.69 trillion rupees in February. ($1 = 81.8020 Indian rupees)

(Reporting by Bharath Rajeswaran in Bengaluru; Editing by Sonia Cheema)