MFs pump over Rs 11,600 crore in equities in Sept; FPIs in sell-off mode

New Delhi: Mutual fund houses have made investments of over Rs 11,600 crore in domestic equities in September despite volatility in stock markets, even as foreign investors pulled out a massive Rs 10,825 crore.

The sell-off by foreign portfolio investors (FPIs) from the Indian equity markets has provided an opportunity to mutual fund managers, experts believe.

According to the latest data available with the markets regulator Sebi and depositories, fund managers lapped up shares to the tune of Rs 11,638 crore last month. On the other hand, FPIs pulled out Rs 10,825 crore from equities.

Investment in domestic equities by fund managers could be largely attributed to retail investors who continue to invest through systematic investment plan (SIP).

"Despite the market volatility and the credit event which occurred, the flow in the equity segment of the market from the retail investors has been positive," Association of Mutual Funds of India (Amfi) Chief Executive N S Venkatesh said.

The 30-share Sensex slumped 6.2 per cent last month owing to sharp fall in the rupee and boiling crude oil prices, turning FPIs into net sellers.

Himanshu Srivastava, senior analyst manager research at Morningstar said while FPIs sold shares in September, domestic mutual funds continued to pump assets into the Indian equity markets and the staggering difference in their approach could be attributed to the fact that both view the markets from different lens.

"For FPIs, India is just another investment in their portfolio. They continuously evaluate India against other comparable markets and see what investment proposition it has to offer. They will not hesitate in trimming their exposure to India if it does not fare well on the risk-reward profile.

"Hence, due to deteriorating macro factors and increasing tension over global trade war, FPIs have been trimming exposure to India over the last few months," he added.

As for domestic equity mutual funds, Srivastava said their only hunting ground is the domestic stock markets. In fact, the recent market correction has provided a good buying opportunity for investors, and pleasingly, mutual funds are trying to capitalise on the same, which is an ideal approach.