Despite a three percent slump in Indian markets in Feb and continued FII outflows amid the worsening Russia-Ukraine crisis and its impact on global growth and inflation, net inflows in equity mutual funds rose 32 percent in February on a month-on-month basis.
As per the latest AMFI data, net inflows in equity mutual funds came in at ₹19,705.27 crore in February 2022 as against ₹14,888 crore in January indicating confidence of investors in Indian markets despite the recent sell-off.
However, the total net inflow for the mutual fund industry dipped 10 percent in February at ₹31,533 crore versus ₹35,251 crore in January, the data showed.
SIP contribution in the month stood at ₹11,438 crore.
Overall, the total assets under management (AUM) of the MF industry rose by ₹31,533.53 crore in February to ₹37.56 lakh crore.
“In current times of geo-political risks where markets have corrected sharply, yet the domestic investors have continued to add more allocation to equity. This is clearly a change of attitude of investors towards this asset class and definitely a positive change. At this stage, net domestic positive flows is supporting the massive outflows seen by FII’s on daily basis. A large part of the positive flows is also due to the strong SIP flow of 11,000 crore monthly which continues to grow strongly,” Akhil Chaturvedi, Chief Business Officer, Motilal Oswal AMC said on the AMFI data.
Flexi-cap funds received the highest inflows during the month at ₹3,873 crore versus ₹2,527 crore in January. It was the most popular fund in the previous month as well.
Meanwhile, sectoral funds were the second most chosen fund for the month with inflows at ₹3,441 crore, the data showed. In January, it witnessed inflows worth ₹2,072 crore.
"All commodities have surged indicating imminent higher inflation. Even though the market is now oversold, sentiments are negative. IT, energy, metals and pharma continue to be safe bets in the present context. But for long-term investors, better returns are likely to come from fundamentally strong beaten-down segments like high-quality financials," suggested VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
The data further showed that inflows in large-cap funds jumped 23.7 percent, MoM, to ₹2,338.6 crore whereas in multi-cap funds inflow were down 34.3 percent MoM to ₹585.3 crore as investors flocked more towards flexicap funds.
Meanwhile, ETF inflow surged 169.2 percent, MoM, to ₹10,791 crore in February. In the debt segment, liquid fund inflow came surged to ₹40,273 crore in February 2022, as against an outflow of ₹14,398 crore in January. Meanwhile, corporate bond funds recorded the largest net outflow of ₹10,218.74 crore and money market funds saw net outflows worth ₹655.82 crore in February.
Hybrid fund inflow also fell 49 percent to ₹40,273 crore in February.