Equity Funds Continued to Receive Net Inflows for the 3rd Consecutive Month in May

The second wave of COVID-19 and volatility induced in the markets have not impacted the equity funds inflow. As per the data released by the Association of Mutual Funds in India (AMFI), May 2021 saw equity funds recording a net inflow of Rs 10,082 crore, their highest since February 2020. 

The net inflows are attributable to the investors showing confidence in markets despite the unprecedented developments, which did not influence the markets as they did in March and April last year. The assets under management (AUM) touched Rs 33.05 lakh core as of 31 May 2021. It was Rs 32.37 lakh crore in the previous month. 

On the other hand, debt funds witnessed a net outflow of Rs 44,512 crore last month. Liquid funds were under pressure, and they saw a net outflow of Rs 45,447.36 crore. Hybrid or balanced mutual fund schemes saw a net inflow of Rs 6,217.30 in May 2021, with arbitrage funds leading the pack with a net inflow of Rs 4,520.88 crore. 

To help the markets’ cause, the most recent announcement concerning quarterly results and GDP/growth numbers were favourable. Also, the investor sentiment is positive, and more and more investors are flocking to invest in equity markets lately. In fact, over 14 million new Demat accounts were opened in FY 21.

With the number of new COVID-19 infections falling daily, we may not be far from seeing most businesses and industries being allowed to resume their operations. Also, the vaccination drive will have a significant say in this and will have a bearing on the markets. 

With some states already beginning to ease lockdown restrictions, we can expect positive developments in the markets in the days to come. In particular, with Mumbai and New Delhi, the most important cities in the country, recording less than 1,000 cases in recent days is a big boost for markets. 

For any clarifications/feedback on the topic, please contact the writer at vineeth.nc@cleartax.in