Inflow into equity mutual funds slumped by over 30 per cent month-on-month to Rs 14,091 crore in September due to a risk-off sentiment in the stock markets.
Equity mutual funds witnessed an inflow of Rs 20,245 crore in August, according to the data from the Association of Mutual Funds in India (AMFI) released on Wednesday.
Despite the decline, inflow through SIPs (Systematic Investment Plans) hit a fresh all-time high of Rs 16,042 crore last month. In the first six months of the current financial year, the total SIP amount stood at Rs 90,304 crore, clocking a healthy run rate of Rs 15,050 crore.
"In the month of September, the equity markets experienced a notable shift towards a risk-off sentiment, following the all-time high of 20,200 points. Despite this shift, equity mutual funds continued to exhibit resilience, recording a significant net inflow of Rs 14,091 crore, "Akhil Chaturvedi, Chief Business Officer, Motilal Oswal Asset Management Company.
The flow in September also marks the 31st consecutive month of net inflows. The equity segment was aided by six new fund launches in September which garnered Rs 2,503 crore.
"The sustained robust inflows into equity funds demonstrate the underlying positive sentiments of investors. The SIP flows continue to be good and could act as a powerful counterforce against any serious FPI outflows, " G Pradeepkumar, CEO, Union Asset Management Company, said.
While overall net flows experienced a dip in various categories of equity funds, thematic or sectoral funds extended their positive trend into the current month, attracting the highest net inflows.
Thematic funds saw the highest inflows to the tune of Rs 3,147 crore during the month. The spike in the flows of this category could also be attributed four new fund launches in this category which cumulatively garnered Rs 1,629 crore..
In August too, this category saw the highest flows (Rs 4,805.81 crore aided by 5 new fund launches).
However, the quantum of net flows in both the small cap and the midcap as a category saw a dip compared to the previous months.
Large-cap funds experienced outflows to the tune of Rs 110 crore during the month. This was the fifth consecutive month where the large cap witnessed net outflows. The midcap category attracted Rs 2,000 crore last month, which was lower than Rs 2,512 crore inflow seen in August. Further, inflow into small-cap funds slowed to Rs 2,678 crore, marking the first slowdown after four months of heavy inflows, averaging at Rs 4,298 crore for the May-Aug period, Gopal Kavalireddi, Vice President - Research at FYERS, said.
"The dip in the net flows of these (small-cap and mid-cap) categories could be attributed to some bit of profit booking by investors coupled with concerns regarding inflated valuations in some of these segments, "Melvyn Santarita, Analyst - Manager Research, Morningstar Investment Adviser India, said.
The flow in small cap funds can be attributed to certain fund houses temporarily halting inflows, possibly due to concerns about rich valuations in the mid and small-cap space, Motilal Oswal Asset Management Company's Chaturvedi said.
NS Venkatesh, CEO, AMFI, said that mutual fund industry's growth has been on an upward trend. The half yearly growth has been encouraging and he is optimistic that the trend will continue to grow.
Debt-oriented schemes witnessed net outflows of Rs 1.01 lakh crore in September, making it the second consecutive month of decline. The segment had witnessed net outflow of Rs 25,873 crores in August.
Expectedly, liquid funds witnessed highest net outflows of over Rs 74,000 crore during the month.
The huge net outflow in September could be attributed to the advance tax requirement that corporates need to meet with it being the quarter end, Morningstar India's Santarita said.
Overall, the 44-player mutual fund industry has witnessed an outflow of Rs 66,192 crore during the month under review as compared to an inflow of Rs 14,386 crore in the preceding month.
The mutual fund industry's AUM stood at Rs 46.58 lakh crore in September-end as compared to Rs 46.63 lakh crore at the end of August.