Mutual funds (MFs) turned net sellers of equities in April amid a run-up in stock prices on sustained inflows from foreign portfolio investors (FPI), a report by Business Standard informed.
This comes despite the benchmark indices, Sensex and Nifty50, logged their biggest monthly advance in April since November last year, gaining 3.6 percent and 4.1 percent, respectively.
Quoting data from the Securities and Exchange Board of India (Sebi), the report observed that MFs sold equities worth over ₹5,100 crore in April, the highest since February 2021. This is only the second month in the last two years when MFs have been net-sellers on a monthly basis, it added.
Prior to April, MFs were on an equity buying spree as they invested a net amount of ₹55,000 crore during the January to March 2023 period, informed the report. The number was more than double the amount deployed in the preceding three months (October to December 2022), BS further said. However, owing to the consistent buying, cash levels at certain fund houses had seen a decline in March, it added.
As per the market daily, the MF inflows in the March quarter came on the back of improved valuations and favourable economic indicators. The 12-month trailing price-to-earnings ratio (PE ratio) of Nifty50 had declined to 21 in March from a high of 32 at the end of September 2021, it further noted.
The report also pointed out that MFs resorted to selling (in April) at a time when foreign investors are showing a change in stance after being net sellers in most months of the 2022 calendar year.
In April, FPIs poured in over ₹10,000 crore for a second month in a row as risk sentiment improved after regulators prevented a banking crisis in the developed world.
The strong inflows from foreign investors helped India outperform all the major global markets in April.
