India equity mutual fund inflows hit nine-month high in February - industry data

By Bharath Rajeswaran

BENGALURU (Reuters) - Inflows into Indian equity mutual funds jumped over 25% sequentially to 156.86 billion rupees ($1.91 billion) in February, the highest in nine months, data from the Association of Mutual Funds in India (AMFI) showed on Friday.

Net equity inflows rises to nine-month high in February https://www.reuters.com/graphics/EQINFLOWS-FEB/FEB-EQINFLOWS/znvnbxreevl/chart.png

The rise in inflows offset some of the pressure on markets, which have witnessed sustained selling by foreign investors.

Foreign Portfolio Investors (FPIs) offloaded 341.46 billion rupees worth of equities in the first two months of 2023. The benchmark has fallen nearly 4% so far this year.

"The rise in inflows into mutual funds demonstrates investor confidence in equity-oriented schemes," said N.S. Venkatesh, chief executive officer of AMFI.

Segment-wise trends https://www.reuters.com/graphics/SEGMENT-FEB/FEB-SEGMENT/byprlqyjmpe/chart.png

Small-cap funds accounted for most of the investments at 22.46 billion rupees, while inflows into large-cap funds halved to 3.554 billion rupees from 7.16 billion rupees in January.

Favourable valuations after a correction in small-cap stocks have attracted investor interest and inflows into the sector, according to AMFI.

Contributions to systematic investment plans (SIPs) - in which investors make regular payments into mutual funds - fell 1% to 136.86 billion rupees after rising to a new record in each of the last six months, data showed.

SIP Contribution eases off record high in February https://www.reuters.com/graphics/SIP-FEB/FEB-SIP/myvmoaearvr/chart.png

The marginal fall in SIP contribution is due to fewer days in February, according to AMFI.

SIP contributions hit nearly 1.77 trillion rupees in the last 14 months, higher than foreign outflows into Indian equities of 1.55 trillion rupees.

"The steady contributions from SIPs have acted as a cushion to markets, which have witnessed significant outflows," said Venkatesh, adding that such sustained foreign outflows in the past could have triggered a slide in markets.

Liquid funds - those that mature in 91 days - logged outflows of 113.04 billion rupees, according to AMFI.

Liquid funds witness outflows for third month in a row https://www.reuters.com/graphics/LIQUID-FUNDSF/FUNDSF-LIQ/dwpkdzwrnvm/chart.png

The mutual fund industry, including debt, equity, hybrid and other schemes, logged a total net inflow of 95.75 billion rupees, down nearly 16% from the 113.73 billion rupees in January, AMFI data showed.

Net flows into mutual funds falls marginally in February https://www.reuters.com/graphics/NET-FLOWSF/FLOWS-NETFEB/znpnbxrbepl/chart.png

The average assets under management fell nearly 0.3% to 40.69 trillion rupees from 40.8 trillion rupees in January.

($1 = 82.0230 Indian rupees)

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