Flows to India’s equity mutual funds jumped 26.5% month-on-month in June, from their lowest in a year, as easing Middle East tensions and rupee-stabilising measures lifted sentiment.
This marks five years and four months of net inflows to equity mutual funds, the longest streak on record.Inflows climbed to 289.73 billion rupees ($3.04 billion) from 229.08 billion rupees in May, data from the Association of Mutual Funds in India showed on Friday.
Large-cap, mid-cap and small-cap funds registered sequential increases in flows of 34%, 39% and 13% respectively.“Rising equity inflows show investors are willing to look past near-term global shocks from the Iran conflict and stay focused on the underlying strength of the Indian economy,” said Aishvarya Dadheech, founder and chief investment officer at Fident Asset Management.“Strong credit growth, healthy GST collections and resilient nominal GDP all point to the possibility of earnings upgrades.”India’s benchmark Nifty 50 index rose 1.4% in June, while small-caps and mid-caps gained 4% and 0.1%, respectively.Greater comfort on valuations and expectations of an earnings recovery in the second half of the year are driving stronger flows into broader markets, where mid- and small-caps offer meaningful alpha, analysts at stock broker SMC Global and portfolio management service Fident said.RISING SIP CONTRIBUTIONS
