on May 10, 2021)Mumbai: Rising Covid infections and the weakness of the rupee have combined to prompt foreign fund managers to continue to take money out of the Indian stock market in May, the second consecutive month of net outflows.
However, in April, selling by foreign portfolio investors (FPIs) was to some extent cushioned by buying from mutual funds (MFs). This also made April the second consecutive month of net buying by domestic equity fund managers. These fund managers see long-term opportunities in the market while, at the same time, an increasing number of fintechs are bringing in new MF investors, boosting the flows, industry experts said.
Official data showed that between April and the first week of May, FPIs have net sold shares worth nearly Rs 15,600 crore, while mutual funds recorded a net buying of almost Rs 10,300 crore. Foreign funds turned net sellers after continuing to be on the buying side for six months on the trot, starting last October. Between October and March, FPIs had net infused nearly Rs 2 lakh crore into equities, which included a net buying worth Rs 55,741 crore in the first three months of 2021.
However, MFs were net sellers in stocks for 10 consecutive months till February this year, official data showed. If fears of Covid persist among overseas investors, then further redemptions cannot be ruled out, according to Morningstar India associate director & manager (research) Himanshu Srivastava. “The nervousness among FPIs with regards to the second wave of the pandemic in India was visible in the flow numbers for this week.”
On the MF front, investment by equity fund managers is expected to continue in the coming months as multiple fintech players are entering this space, bringing in more users in this segment, Invest19 founder & CEO Kaushlendra Singh Sengar said. In addition, according to Bajaj Capital chief research officer Alok Aggarwala, the current bullish stance would continue as valuations moderate somewhat post-FY21 earnings and the consolidation provides investors with an opportunity to accumulate stocks.
