A sustained buying by the domestic funds limited the fall in the Indian equity market to 3% over the three months to December despite selling by foreign investors. According to the SEBI data, the three-month net cumulative inflow of domestic mutual funds was at a record high of Rs 53,718 crore while the outflow by foreign funds was Rs 38,271 crore, the highest since May 2020.
The domestic inflow was over Rs 18,000 crore in December taking the gross buy-to-sale ratio to 1.37 compared with the long-term average of 1.06. The domestic funds invested Rs 76,235 crore in equities in 2021 of which nearly 70% was deployed in the last three months of the year. Excluding the outflow in the first two months of the year, local funds have been net buyers of equities for ten months in a row that resulted in the inflow of more than Rs one lakh crore during the period.
The higher deployment by local funds was on account of growing popularity of systematic investment plans (SIP). The SIP inflow was at a record Rs 11,004 crore in November 2021 taking their total assets under management (AUM) to Rs 5.5 lakh crore. Nearly 90% of SIPs are linked to equity funds. In addition, the folios under retail schemes including equity, hybrid, and solution-oriented schemes rose toa record 9.5 crore.
The total equity value of the domestic funds increased by 60% year-on-year to Rs 19.1 lakh crore in November, while the total institutional funds’ AUM expanded by 53%.The ratio of the AUM of domestic funds including MF, local pension funds, insurance companies, banks and financial institutions and foreign funds rose to an 11-month high of 76.2%.