Investors may continue to sell mutual funds unless there is correction in markets: Report

Many mutual fund investors seem to be cautious about how the capital markets would perform in the coming months and have exited some of their investments, an SMC report said. Investors would continue this selling spree unless the capital markets correct a bit, the report said.

This also comes at a time when most of the mutual funds saw their returns improve as the stock markets globally started seeing an upswing. Many investors may booking profits but could continue investments said industry trackers.

Mutual funds pulled out Rs 30,760 crore from equities in November on profit booking and experts believe the outflow trend will continue unless there is correction in markets,” the SMC report said.

“Net withdrawal by mutual funds (MFs) has reached to over Rs 28,000 crore in the first 11 months of the ongoing year (January-November), data. The markets, despite the withdrawals from mutual funds in the last few months, have continued to rise as flows from FPIs have been robust. Foreign Portfolio Investors (FPIs) have put in over Rs 1.08 lakh crore in the Indian equity markets during January-November period of 2020. According to the data, MFs pulled out Rs 30,760 crore from equities in November. This has taken the outflow to over Rs 68,400 crore since June. MFs withdrew Rs 14,492 crore in October, Rs 4,134 crore in September, Rs 9,213 crore in August, Rs 9,195 crore in July and Rs 612 crore in June. However, they invested over Rs 40,200 crore in the first five months of the year (January-May). Of this, Rs 30,285 crore was invested in March,” the report added.

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Global investors have been moving away from safe investments such as the US dollar and gold. These investors are pumping money in stocks with a hope that countries would see a growth spurt as Covid vaccine is rolled out globally. In India too stock markets have seen a spurt even as the country’s Gross Domestic Product declined for two quarters.


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