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Equity buying by MFs picks up momentum

Mutual funds (MFs) are upping the ante when it comes to investing in stocks, even as the market is registering fresh record highs.

Fund managers are on course this month to pump in the highest-ever monthly flow into the stock market in a little over six years.

In the 13 trading sessions till Wednesday, MF houses had invested Rs 3,700 crore into stocks, shows data from the Securities and Exchange Board of India. If this pace of buying continues, MFs could surpass the Rs 5,064 crore invested last month to invest the most since January 2008, when they had pumped in Rs 7,700 crore.

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The strong buying follows robust inflows into equity MF schemes since mid-May, when the Narendra Modi-led Bharatiya Janata Party won a decisive mandate in the general elections. Equity schemes saw flows of about Rs 20,000 crore between May and July and the tally is set to increase this month.

“Retail money has started coming in, as is evident from an increase in the number of systematic investment plans. The bar has clearly been raised in terms of the flows and sales (at MFs). Sentiment remains positive and flows will continue to be reasonably robust,” said Ajit Menon, executive vice-president, BlackRock MF.

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Gross inflows into MF equity schemes since the Modi government took charge have been about Rs 40,000 crore. “The sentiment for the market has turned positive, which has resulted in better inflows for the equity markets, with inflows coming in from retail investors. They’ve started increasing their allocation to equities due to poorer performance of other asset classes like real estate and gold,” says S Naren, chief investment officer at ICICI Prudential MF.

As on July, the assets under management of equity schemes (including equity-linked saving schemes) was at Rs 2.51 lakh crore, a fourth of the sector’s overall assets of a little more than Rs 10 lakh crore.

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