India equity mutual fund inflows hit four-month high in Jan - industry data

A broker laughs while speaking to a colleague, as they trade on their computer terminals at a stock brokerage firm in Mumbai
A broker laughs while speaking to a colleague, as they trade on their computer terminals at a stock brokerage firm in Mumbai, March 4, 2015. REUTERS/Shailesh Andrade/Files

BENGALURU, Feb 9 (Reuters) - Inflows into Indian equity mutual funds jumped nearly 72% to 125.47 billion rupees ($1.52 billion)in January, their highest in four months, data from the Association of Mutual Funds in India (AMFI) showed.

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The inflows had more than tripled in December to 73.03 billion rupees.

The rise in inflows last month offset some of the pressure on the markets, which witnessed heavy selling by foreign investors. Foreign selling in Indian equities hit a seven-month high of $3.51 billion in January, according to official data. read more

The broader indexes, NSE Nifty 50 (.NSEI) and S&P BSE Sensex (.BSESN) fell over 2% each in January.

"Mutual fund investments are acting as a counterbalance to foreign portfolio outflows," N.S. Venkatesh, chief executive officer of AMFI said, adding that over 900,000 new investors have poured money into mutual funds in January.

"The rise in equity mutual fund inflows in a volatile market shows that investors have reposed their faith in equities as a wealth creator and multiplier," Venkatesh said.

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Small-cap funds accounted for most of the investments at a three-year high of 22.56 billion rupees, while large-cap funds attracted 7.16 billion rupees, a six-month high.

After the substantial correction in small caps, investors see value in the segment, according to AMFI.

The net positive flows in a subdued market are a sign of the increasing maturity of investors to continue their allocations in equity mutual funds, said Akhil Chaturvedi, chief business officer at Motilal Oswal AMC

Contributions to systematic investment plans (SIPs) - in which investors made regular payments into a mutual fund - rose for the sixth consecutive month to a record 138.56 billion Indian rupees, data showed.

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The rising SIP contributions have acted as a cushion to markets, amid persistent FPI outflows, said Venkatesh.

SIP contributions hit 1.5 trillion rupees in the last 12 months, much higher than the foreign outflows of 1.17 trillion rupees.

Liquid funds - funds that mature in 91 days - saw outflows of 50.42 billion rupees, according to AMFI.

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The mutual fund industry, including debt, equity, hybrid and other schemes, logged a total net inflow of 113.73 billion rupees, up 153% from 44.91 billion rupees in December, AMFI data showed.

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The average assets under management barely rose to 40.8 trillion rupees from 40.76 trillion rupees in December.

($1 = 82.6080 Indian rupees)

Reporting by Bharath Rajeswaran in Bengaluru; Editing by Dhanya Ann Thoppil

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