Buying in equity and equity-oriented schemes outpaced selling by mutual funds for the second consecutive month in April, although net purchases fell to Rs 3,437 crore from Rs 9,115 in March.
SIP inflows in April remained strong at Rs 8,596 crore against Rs 9,182 crore in March, and were back to pre-pandemic levels.
"The SIP flows averaged Rs 8,000 crore a month in the last financial year and we expect it to touch Rs 8,500 crore in the current financial year," said a report by Narnolia Financial Services.
"All the equity & equity oriented mutual funds except for Multi-Cap funds, Value funds and ELSS Funds saw positive inflows during April. Sectoral funds and Midcap funds saw the highest inflows at Rs 1,705 crore and Rs 958 crore, respectively. Such trends suggest investors have started entering into the wider mutual fund segment apart from just largecap and multicap funds," said the report.
This inflow may be one of reasons that supported the market during the times of volatility and rangebound trade in the past more than a couple of months, when there was an FII outflow. Experts expect the inflow to continue with the recovery in earnings and the economy along with receding COVID cases.
"Any correction could result in significant inflows as there are potentially investors on the fence. The interesting trend of money being allocated to relatively newer categories like international funds and domestic index funds continues to gain traction," said Aashish Somaiyaa, Chief Executive Officer at White Oak Capital.
"As market performance and corporate performance broadens it will be interesting to watch for sustainability of this trend vis-à-vis domestic active equity funds," he added.
The BSE Sensex and Nifty50 fell 1.47 percent and 0.41 percent, respectively in April, but so far in 2021 they have gained 2 percent and 4.64 percent, respectively.
ICICI Direct collated a list of 10 stocks each from largecaps, midcaps and smallcaps categories which saw highest buying and selling in April.
In the month of April, among largecaps, asset management companies made highest buying in Punjab National Bank, DLF, Tata Steel, Adani Ports and Special Economic Zone, and Alkem Laboratories.
However, Indus Towers, Vedanta, JSW Steel, Britannia Industries and Cadila Healthcare witnessed highest selling by mutual funds, in largecaps during the month.
Vedanta remained among top five stocks in the selling list.
Among midcaps, the highest buying by AMCs was in L&T Finance Holdings, Vodafone Idea, Glenmark Pharmaceuticals, Granules India and IDFC First Bank, whereas GMR Infrastructure, Escorts, Prestige Estate Projects, Coforge, and Dr Lal Pathlabs witnessed highest selling.
Granules India and L&T Finance Holdings remained in the buying list among top five stocks in April as well.
In the smallcap segment, mutual funds made the maximum buying in Hindustan Copper, Hathway Cable & Datacom, Lux Industries, Bharat Rasayan and Dilip Buildcon.
However, Tata Coffee, Alkyl Amines Chemicals, PTC India, TVS Srichakra and India Cements saw the highest selling by asset management companies.
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