Although India’s market capitalisation has fallen by nearly 8 percent from peak levels, the equity value of the domestic mutual funds touched a record ₹20 lakh crore in March as a result of sustained inflows, NSDL data shows, reported The Economic Times.
This includes equity funds, arbitrage funds, equity exposure in balanced funds and exchange-traded funds (ETFs).
Local funds had the second-largest equity AUM at the end of March 2022 after foreign portfolio investors (FPIs) who have an AUM of ₹47 lakh crore. The share of local mutual funds in the country’s market capitalisation surged by 300 basis points to 8 percent over the past year, wrote The Economic Times.
The AUMs of local equity funds have nearly doubled over the past two years buoyed by strong inflows. Indian savers invested over ₹three lakh crore in FY22 in equity mutual funds through active and passive schemes.
The AUM share of domestic funds in the total institutional equities rose by nearly 160 basis points to 17. 4 percent in March. The total institutional equity AUM at ₹117. 7 lakh crore accounted for nearly half of India’s market capitalisation.
With sustained local inflows, the ratio of the AUMs of the domestic funds and FPIs improved to 82.8 percent in March from 73 percent a year ago.
The improving ratio implies that the country’s market cap will show lesser volatility in times of higher redemption pressure by foreign investors. For instance, despite recent heavy selling by FPIs, Indian equities have shown limited impact.