By Bharath Rajeswaran
(Reuters) – India’s equity mutual funds saw inflows for the 43rd month in a row in September, the longest on record, but inflows moderated sequentially following a dip in sectoral and thematic funds, according to data from the Association for Mutual Funds in India on Thursday.
Inflows into equity mutual funds fell 10% to 344.19 billion rupees ($4.10 billion) in September.
However, total inflows into equity mutual funds for the first nine months of 2024 almost tripled year-on-year to 2.75 trillion rupees, the fastest rise on record, with thematic and sectoral funds contributing 44% of total inflows.
Thematic and sectoral funds, which saw a 27% sequential drop to 132.55 billion rupees of inflows in September, were still the biggest contributors to overall equity inflows.
“Such funds come with a bias as they are inclined towards a theme or sector. In case the concerned sector/theme experiences some headwinds, then the entire fund may start to underperform, in stark contrast to a diversified fund,” said Ashwini Kumar, senior vice-president and head of market data at ICRA Analytics.
Meanwhile, contributions to systematic investment plans (SIPs), where investors make regular payments into mutual funds, touched a record high of 245.09 billion rupees in September, hitting a lifetime high for the 15th straight month.
India’s benchmark NSE Nifty 50 and S&P BSE Sensex gained about 2.3% last month, driven by steady mutual fund inflows and rising foreign buying after an outsized U.S. rate cut.
Inflows to large-cap mutual funds dropped 34% to 17.69 billion rupees. In contrast, inflows into small-cap funds remained flat at 30.71 billion rupees, while mid-cap fund inflows rose marginally during the month.
The Nifty mid-cap 100 rose 1.5% and the small-cap 100 shed 0.7% in September, underperforming the benchmarks.
However, so far this year, mid- and small-caps have gained 28% and 25%, respectively.
The Nifty 50 has gained 15% in 2024, drawing retail investors in droves to invest via funds and directly in the stock market. The index rose 20% last year.
($1 = 83.9750 Indian rupees)
(Reporting by Bharath Rajeswaran in Bengaluru; Editing by Sonia Cheema)
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