Taking advantage of low valuations, domestic mutual funds pumped a staggering Rs.5,023 crore into the stock market so far in the New Year, even as overseas investors pulled back from equities.
Aiming households
Given the sluggish trends in the real estate market and downtrend in gold prices, mutual fund houses are expecting to attract a larger share of Indian households’ savings from this year. The fund houses pumped in Rs.70,716 crore in the entire 2015, according to the latest data.
In comparison, foreign portfolio investors (FPIs) were net sellers of equities worth Rs.9,963 crore during the same period.
However, FPIs were net buyers of equities to the tune of Rs.17,806 crore last year. Before that, they had invested Rs.1 lakh crore in each of the preceding three years.
Crash time
The investment by mutual funds comes at a time when the stock market crashed due to the sharp slump in crude oil prices and concerns over China’s slowdown. The BSE benchmark Sensex has plunged over 6 per cent so far this month.
Domestic mutual funds have made intensive buying during the period to take advantage of the lower valuations, experts said.
“Domestic mutual funds have been bullish on the stock market ever since the Narendra Modi-led BJP government came to power at the Centre in May 2014,” Quantum AMC Director IV Subramaniam said.
Retail participation could provide the much-needed liquidity to the stock markets that have been largely driven by FPIs for the past few years, he added.
In comparison, foreign portfolio investors were net sellers of equities worth Rs.9,963 crore during the period
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