Domestic funds stay put in equities with sustained inflow in August

ET Intelligence Group : The 12-month cumulative rolling investments in equities by domestic mutual funds reached a record high of ₹3.3 lakh crore ($39 billion) in August, according to Sebi data, driven by new opportunities in the primary market including IPOs and qualified institutional placements. The latest 12-month cumulative inflow was nearly six times higher than the average of the last five years. It has been consistently rising for the past 15 months.

Investment by foreign portfolio investors (FPI) during the 12 months to August was ₹78,705 crore, which was just 24% of domestic investments.

In August 2024, domestic funds invested ₹34,432 crore, marking it to be the third-largest monthly flow. They have remained net buyers of equities for the 16th consecutive month. With consis tent inflows and capital appreciation, the equity assets under management (AUM) of domestic funds reached a record ₹42.6 lakh crore in July 2024.

The AUM ratio of domestic funds and FPIs remained above one for the fourth consecutive month, according to the NSDL data. Local funds are now the largest category of institutional equity investors based on the AUM, with a record share of 21% in July 2024, reflecting a 226 basis points increase over the past year. Additionally, the buy-to-sell ratio, a measure of buying momentum, rose to 1.18 in August 2024, compared with the long-term average of 1.07.