Equity funds invest record Rs 12.7k crore in July

With the share market hitting new highs on a regular basis for the past few months, equity mutual funds (MFs) continue to pump in a record amount of money into stocks. Equity MFs (including equity linked savings schemes or ELSS) received record net inflows of about $2 billion (Rs 12,727 crore) in July , data from industry trade body AMFI showed. And if this goes by the industry convention of adding at least 50 per cent of inflows in balanced funds as equity inflow, the total figure would be in the range of $2.6 billion (Rs 16,660 crore).

The latest data from AMFI also showed that total assets managed by the MF industry as of end-July rose to an all-time high at Rs 19.97 lakh crore, a 31.5 per cent annual growth. Also, equity assets were at an all-time high at nearly Rs 7 lakh crore, or about 35 per cent of the total industry assets. AMFI data also showed that in July liquid funds witnessed net out flow of about Rs 19,500 crore.

Compared with the huge net inflows in equity funds, Sebi data showed that total purchases of stocks by fund houses in July were of about $1.9 billion, which was 2.3 times the money deployed by foreign institutional investors (FIIs). In each of the last four months, domestic fund houses have pumped in more money into Indian stocks than their overseas peers, official data showed. Though foreign funds are marginally ahead of equity MFs in investments so far in 2017, their overall per formance for the year is largely due to the massive $4.75 billion (Rs 30,906 crore) net inflow in March.

According to A Balasubramanian, chairman, AMFI, while the stock market is rallying, interest income from fixed income products, like bank and company deposits, is falling due to cut in the rate of interest in the economy .Also, gold and real estate have not given good returns over the last few years. "Due to these reasons people are looking at other asset classes, including shares," Balasubramanian, who also heads Birla MF , said.

Sunil Singhania, global head (equities), Reliance Capital agrees. " Alternative investment options have reduced while returns from equity investments have also been quite decent," he said.

According to Gopal Agrawal, CIO (equities), Tata MF, the positive outlook on the economy due to the implementation of the GST and the good progress of monsoons are also helping the stock market rally .