Mutual funds pump $1bn into stocks in Oct as market rallies

Even as the markets are scaling new highs, equity mutual funds (MFs) continue to lap up shares. Net investments (higher purchase than sales) by equity MFs in shares stood at around $1 billion (Rs 5,940 crore) in October Nifty Trading Tips

Fund houses have made net investments to the tune of close to $3 billion in shares in the last three months alone with their net purchase topping $4.25 billion ever since the BJP-led government came to power. In fact, deployment in stocks by funds have surged about 50% between April and September. Equity MFs deployment in shares stood at Rs 2.94 lakh crore at the end of September, data with market regulator Sebi showed.

While a part of the increase can be attributed to the sharp rise in equity indices, fund houses have also increased their exposure to the stock market following the sustained improvement in inflows into equity schemes Intraday Trading Tips

Net inflows into equity funds surged to a new high of Rs 7,789 crore in September pushing total inflows in the first half of the current financial year to Rs 33,790 crore. Equity MFs recorded net outflows of Rs 5,354 crore during the same period the previous year.

"We are seeing continuous inflows into equity schemes. The gross inflows are increasing and redemptions (investor exits) have reduced," says Sunil Singhania, head, equities, Reliance Capital Asset Management. "We are positive on the market. More than 90% of the money has been deployed in shares in most schemes," he says Commodity Trading Tips

"Domestic investors are looking at equities more favourably now. Equity has become an attractive asset class following the improvement in macro-economic conditions," says Gopal Agrawal, chief investment officer, Mirae Asset Global Investments India. "The fall in commodity prices and inflation has boosted sentiments," he says.

Funds mobilized by equity-oriented schemes more than doubled to Rs 69,556 crore at the end of September, Sebi data showed. A strong rally in the equity market led to the sharp rise in retail folios or investor accounts. The equity category has posted a record addition of 4 lakh folios in April-September. The benchmark sensex and nifty rose 24% each in the last six months with mid-cap, small-cap and sectoral indices increasing at a much faster pace Stock Market Tips