Equity mutual funds attracted Rs 8,898 crore in July, a decline of 43 per cent compared to the previous month, as markets continued to remain volatile amid concerns over inflation and rate hike expectations.
Equity mutual funds witnessed inflows in July for the 17th consecutive month.
In July, net inflows were lower compared to Rs 15,495 crore seen in June, Rs 18,529 crore in May and Rs 15,890 crore in April, according to data released by Association of Mutual Funds in India Amfi on Monday.
Net inflow has been seen since March 2021 in equity schemes. The schemes had seen outflows for eight months from July 2020 to February 2021, losing Rs 46,791 crore.
Markets are volatile as concerns over an inflation trend continue to mount. The RBI's rate hike cycle and the expectation of further hikes in August probably resulted in investors adopting a cautious stance, said Kavitha Krishnan, Senior Analyst Manager Research at Morningstar India.
The drop in equity inflows is due to the weakening rupee and geopolitical tension that started in central Europe earlier this year, and the latest sparks in the strait of Taiwan, said Nitin Rao, Head Products Proposition of Epsilon Money Mart.
July seems to be the month when investors have taken some profits as markets went up. The markets were correcting but in July was a steep fall and we might have seen actual net negative sales in July, Akhil Chaturvedi, CBO of Motilal Oswal AMC, said.
In July, all equity-oriented categories received net inflows, with the Small Cap Fund category being the biggest beneficiary with a net inflow of Rs 1,780 crore. The Flexi Cap Fund fund saw 1,381 crore net infusion, which was followed by the Flexi Cap Fund fund. Over 1,000 crore net inflow was witnessed by Large Cap Fund, Large Mid Cap Fund and Mid Cap Fund.
Flows into equity mutual funds have been very healthy for many months now and we expect this to continue. As always, there will be ups and downs, as always, said Rajiv Shastri, Director and CEO of NJ AMC.
Inflows through Systematic Investment Plans SIPs were at Rs 12,140 crore last month compared to Rs 12,276 crore in June. The number of SIP accounts reached a new all-time high of 5.61 crore in July.
N S Venkatesh, Chief Executive of Amfi, said that the continued monthly SIP contribution of over 12,000 crore reinforces mutual funds as a preferred investment avenue.
He said positive flows in almost all mutual fund schemes barring hybrid funds stand in good stead as the economic recovery would speed up in the next few quarters.
There was an inflow of Rs 4,930 crore for debt mutual funds last month after seeing a net outflow of Rs 92,247 crore in June.
In July, Gold Exchange Traded Funds received a net outflow of Rs 457 crore, which was in contrast to the net infusion of Rs 135 crore seen last month.
In July, the mutual fund industry registered a net inflow of Rs 23,605 crore compared to a net withdrawal of Rs 69,853 crore in June. It was mainly due to higher levels of redemption from debt mutual funds.
The Assets Under Management AUM of the industry was up to 37.75 lakh crore at the end of July from 35.64 lakh crore at the end of June.