(April 10): India’s individual investors doubled down on stock mutual funds in March, pouring in record amounts in monthly recurring plans despite heightened geopolitical tensions and market volatility.
Flows to systematic investment plans climbed to an all-time high of 320.9 billion rupees (US$3.5 billion), according to data from the Association of Mutual Funds in India. Total net inflows into equity-oriented funds surged to 404.5 billion rupees, up from 259.8 billion rupees in February.
The inflows underscore the growing role of local investors in stabilising equities even as the Middle East conflict disrupts global markets. The NSE Nifty 50 Index slumped more than 11% in March, the steepest monthly drop in six years, as global funds pulled a record US$14 billion. Local institutions absorbed much of the selling, but that support has yet to offset persistent foreign outflows.
“Domestic investors are the new market anchors — they’re no longer just a buffer; they’re actively setting the floor in volatile sessions,” Suranjana Borthakur, head of distribution at Mirae Asset Investment Managers (India) said. Small- and mid-cap fund flows surged 61% and 51%, respectively, “confirming investors are treating every correction in the space as a buying opportunity,” he added.
Equity funds have emerged as a key pillar of support to domestic markets in recent years. Flows from plans where savers set aside a fixed amount every month as part of their mutual fund investment plan — akin to dollar-cost averaging in the US — have hovered above US$3 billion per month, helping buffer the nation’s equities against the near-record outflows by overseas investors.
See also: India keeps key rate steady as weak rupee takes centre stage
The surge in equity inflows boosted shares of money managers. Shares of HDFC Asset Management Co rallied as much as 4.4% to their highest since March 2. Nippon Life India Asset Management Ltd and UTI Asset Management Co also advanced.
Flexi-cap mutual funds — which allow money managers to move across market capitalisations — received 100.5 billion rupees in net inflows in March, the most among all actively managed stock funds, according to AMFI data. In contrast, debt funds saw an outflow of 2.95 trillion rupees.
Meanwhile, inflows into gold exchange-traded funds more than halved to 22.7 billion rupees from February. The fading interest comes after record flows in January eclipsed equity inflows.
See also: Rupee surges most since 2013 as India's central bank ramps up currency control
“Despite continued geopolitical headwinds and global risk-off sentiment, domestic investors used the market correction as an opportunity to deploy capital, signalling growing comfort with current valuations,” said Viraj Gandhi, chief executive officer at SAMCO Mutual Fund.
Uploaded by Evelyn Chan
