Despite a slight dip in SIP numbers, India's equity mutual fund schemes saw robust net investments of approximately ₹38,440 crore in April, reflecting sustained investor confidence amidst a recovering market.
Key Points
- Net investments into equity mutual fund schemes reached approximately ₹38,440 crore in April, maintaining elevated levels despite a 5% decrease from March's peak.
- The sustained inflows reflect resilient domestic investor sentiment amidst global uncertainties and equity market volatility, with the Nifty 50 gaining 7% in April.
- Flexicap, midcap, and smallcap funds attracted the majority of investments, accounting for 61% of active equity net inflows, indicating investor confidence in India's growth story.
- Systematic Investment Plan (SIP) inflows experienced a 3% month-on-month decline to ₹31,115 crore, a rare dip in its post-pandemic upward trajectory.
- Overall assets under management for the industry rose 11% month-on-month, driven by robust inflows across categories and positive mark-to-market gains.
Net investments into equity mutual fund (MF) schemes, which had surged in March amid a market correction, remained elevated at Rs 38,440 crore in April.
While this was 5 per cent lower than the recent high of Rs 40,450 crore recorded in March, it remained well above the average monthly inflows seen over the past year.
Inflows stayed elevated despite a 16 per cent decline in gross inflows to Rs 70,302 crore in April, as redemptions eased 26 per cent to an eight-month low of Rs 31,862 crore, according to the latest data released by the Association of Mutual Funds in India (Amfi).
Sustained Investor Confidence
“While the inflows were marginally lower, the overall trend indicates sustained resilience in domestic investor sentiment despite the prevailing uncertain global environment and intermittent volatility in equity markets,” said Himanshu Srivastava, principal, manager research, Morningstar Investment Research India.
The equity market recovered strongly in April, recouping a large part of the losses seen in March amid easing concerns around the US-Iran conflict.
The Nifty 50 index gained 7 per cent during the month, while broader market indices outperformed, with the Nifty Smallcap 250 index rising more than 17 per cent.
Category-wise Performance
Net inflows mirrored the outperforming market segments, with flexicap, midcap, and smallcap funds attracting the bulk of investments in April.
Together, these categories accounted for 61 per cent of active equity net inflows.
While flexicap funds drew more than Rs 10,000 crore for the second straight month, combined inflows into midcap and smallcap funds rose 9 per cent to Rs 13,437 crore.
“Smallcap funds have historically seen sharper drawdowns during periods of market stress, and the fact that investors are not only holding but actively adding to this category suggests either renewed confidence in the India growth story at the margin, or an allocation catch-up by investors who see post-correction value in smaller companies,” said Nitin Agrawal, chief executive officer (CEO), MFs, InCred Money.
SIP Inflows Decline
Despite elevated overall inflows, the industry saw a setback on the systematic investment plan (SIP) front. SIP inflows declined 3 per cent month-on-month (M-o-M) to Rs 31,115 crore.
The decline is striking given that SIP inflows have largely maintained an upward trajectory in the post-pandemic period.
“Market volatility may have led some investors to temporarily pause SIP contributions, although the overall base of contributing SIP accounts has remained broadly stable,” said Venkat Chalasani, chief executive, Amfi.
He added that the moderation in April SIP inflows was partly because March numbers were inflated by transactions pushed from February due to a holiday at the month-end.
Overall AUM Growth
The industry’s overall assets under management rose 11 per cent M-o-M, aided by robust inflows across categories as well as mark-to-market gains.
Debt funds accounted for the bulk of inflows at Rs 2.5 trillion, while hybrid funds and passive schemes attracted around Rs 20,000 crore each.
“Against the backdrop of a challenging global environment, Indian MF investors have shown commendable resilience,” said Navneet Munot, managing director and CEO, HDFC Asset Management Company.
