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MOSL: FUND FOLIO (October 2019)-Equity inflows moderate-Defensives less in favor

FUND FOLIO (October 2019): Equity inflows moderate; Defensives less in favor

 

Key observations

• Just when the corporate tax cut appeared to hand over the reins to the bulls, volatility in financials and global growth concerns captured the market attention, exerting selling pressure toward the end of Sep’19. Consequently, the Nifty shaved off part of its gains to end 4.1% higher in the month. Coming to mutual funds (MF), inflows held relatively steady in Sep’19, with SIP contribution increasing to INR82.6b from INR82.3b in the previous month.
• MF industry’s AUM declined 3.8% MoM (INR1t) to INR24.5t in Sep’19, primarily led by outflows of INR1.4t in liquid-oriented schemes. Redemptions by corporates to meet liquidity demand for advance tax payments could be a reason for the decline in AUM.
• Gross equity sales declined 7% MoM to INR252b in the month. At the same time, redemptions increased 13% MoM at INR136b. Consequently, after hitting an 18-month high of INR151b in Aug’19, net inflows in equity (including ELSS and arbitrage) slowed down to INR116b.