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Summary
Equity mutual funds have played a heroic role in propping share indices up. But inflows flagged a bit in April. Is this a cause for worry? Or can India count on steady retail participation via systematic investment plans?
How long can mutual funds (MFs) hold up stock indices in India? Inflows into equity MFs in April fell 5% from March to ₹38,440.2 crore, according to data issued on Monday by the Association of Mutual Funds in India. This despite the 6.5%-odd rise in the BSE Sensex last month.
Such funds have been a major source of strength for share prices as foreign investors have been withdrawing money, but their inflow moderation points to the limits of this heroic role. Household investors may have turned a tad cautious. Understandably so. The conflict between the US and Iran is far from over and the Strait of Hormuz still has hydrocarbon markets gasping for supply.
This is weighing on the global economy, including India’s, whose widening trade gap comes at a particularly dry time in terms of capital flows, putting the rupee in a precarious place.
On the bright side, the equity MF dip isn’t all that big and contributions through systematic investment plans (SIPs) have held firm at ₹31,115 crore, not much below their record-high of ₹32,087 crore in March. Overall, there is no sign of MFs running low on investor funds in a way that would leave market indices short of support.
English (US) ·