India’s mutual fund industry has seen a significant surge in inflows through new fund offers (NFOs) in June, with 11 NFOs from various fund houses collecting a record Rs 14,370 crore. This is the highest ever inflow in new offerings, surpassing the previous high of Rs 13,709 crore in July 2021.
The industry has seen a total of 30 active equity schemes launched in the first half of 2024, compared to 51 in the entire 2023. The investment in NFOs from the beginning of this year till June stands at Rs 37,885 crore, exceeding the total investment of Rs 36,657 crore in the entire last year.
Get Latest Mathrubhumi Updates in English
The ongoing rally in the Indian stock market, following the Lok Sabha election results, has led to a surge in NFOs.
Currently, around seven active and passive equity NFOs are open for subscription, including ICICI Prudential MF’s Energy Opportunities Fund, Franklin Templeton MF’s Multicap NFO, and Edelweiss MF’s Business Cycle Fund.
However, most of the NFOs are coming in high-risk categories like thematic funds, which has raised concerns among experts.
Neil Parekh, CEO and Chairman of Parag Parekh Financial Advisory Services Limited (PPFAS), expressed his concern on social media, stating that the increasing number of NFOs, especially thematic funds, is “scary” and that investors need to be cautious.
Despite this, the investment in the mutual fund industry continues to grow, with inflow figures standing at Rs 40,608 crore in June, following an inflow of Rs 34,697 crore in May, which included NFOs investment of Rs 9,563 crore.
The Sensex and Nifty have given returns of over 10% to investors so far in 2024.
Net FPI in July rises to Rs 15,352 crore
The Indian equity market has witnessed a significant surge in the Foreign Portfolio Investment (FPI) with an increase of Rs 7390 crore during the second week of July.
According to data from the National Securities Depository Limited, the net FPI in July has risen to Rs 15,352 crore.
Foreign Institutional Investors (FIIs) displayed alternating behavior, selling equities worth around Rs 60,000 crore in January, April, and May, while making cumulative purchases of Rs 63,200 crore in February, March, and June.
According to Geojit Financial Services Chief Investment Strategist V K Vijayakumar, “The most significant feature of institutional equity flows into the Indian market is the erratic nature of FII flows and the steady growth nature of DII flows.”
In June, FPIs turned net buyers, injecting Rs 26,565 crore into Indian equities, following a period of selling. However, in May and April, they withdrew Rs 25,586 crore and Rs 8,671 crore, respectively.
Vijayakumar noted that the inflows into DIIs like mutual funds are on an upward trajectory, making the markets resilient. He also mentioned that FII flows will continue to be erratic, influenced by global factors, but the positive results from IT majors indicate potential buying in stocks with reasonable valuations.