Local mutual funds‘ investment in equities through the secondary market rose to ₹20,764 crore in March 2023 – the highest in nine months, data from Sebi show.
Domestic investors have been buyers of equities for the seventh month in a row. The Nifty 50 valuation dropped to 17.3 times of its one-year forward earnings in mid-March, which is in line with the 10-year average. This was the second time since Covid-19 struck in 2020 when the Nifty 50 index dropped to its long-term average level.
The underlying buying strength can be gauged from the fact that gross purchase of mutual funds remained more than ₹1 lakh crore for the fourth month in a row, taking the gross buy-to-sell ratio – a measure of buying momentum of institutional investor – to 1.25 in March 2023, compared with the long-term average of 1.07.
Secondary market investment of domestic funds captures all flows of MF related to equity exposure that includes pure equity, balance funds, ETFs and ELSS fund category.
With investment of nearly ₹1.83 lakh crore cumulatively in the last 12 months, mutual funds’ contribution to the total institutional equity AUM rose to a record high of 18.60% in March 2023 compared with 17.35% a year ago. This accounted for 125 basis points on YoY basis – the highest among all institutional investors.
Total equity AUM of MFs stood at ₹22.63 lakh crore at the end of March 2023, while total institutional equity AUM was ₹121 lakh crore, that is nearly half of India’s market capitalisation. MFs’ AUM has grown year on for 27 months in row at an average of 34.4%.
