AMC stocks tumble as inflows into equity MFs plunge in June

Our Bureau Chennai | Updated on July 09, 2020 Published on July 09, 2020

Nippon Life fell 2.95% and HDFC Asset 2.58%; analysts, however, remain bullish for long-term

Shares of asset management companies (AMCs) turned weak on Thursday on reports that inflows into equity funds fell sharply in June. However, analysts are still bullish on the sector for the long-term. HDFC Asset Management Company tumbled 2.58 per cent at ₹2,491.40 apiece, while Nippon Life Asset Management closed 2.95 per cent lower at ₹294.50 per share on the BSE.

On the other hand, benchmark indices S&P BSE Sensex and NSE Nifty 50 gained over 1 per cent. SBI (that owns SBI Mutual Fund) and Kotak Mahindra Bank (owner of Kotak AMC) ended in the positive terrain as most banks ended in the green.

Inflows into equity schemes of mutual funds plunged to a new low of ₹241 crore in June against ₹5,256 crore in May due to high redemption pressure. Investment through monthly systematic investment plan fell below the ₹8,000-crore mark to ₹7,927 crore. In May it was ₹8,123 crore.

The SIP assets under management jumped to ₹3.84-lakh crore against ₹3.20-lakh crore. According to the Association of Mutual Funds in India, this is the third consecutive monthly decline in inflows in equity mutual funds.

According to a Chennai-based analyst tracking the market and mutual funds, the sharp decline in the inflows is mainly due to the current economic slowdown. “Any drop in the share price is good to accumulate as it is a temporary phenomenon,” he said, adding that once the lockdown gradually opens up, economic activity will definitely pick up and inflow will back to normal level.

Recently, a CII-Mutual Fund white paper said though there are a number of challenges in the distribution, the situation is changing for better. “Today, MF has started becoming a household name in small cities and towns as well.

MF has started becoming the part of monthly wallet of middle class families which gets reflected by the new SIP enrolments and we are sure that these numbers will grow manifold from here.”

Sachin Shah, Fund Manager, Emkay Investment Managers, said, “At least till last month, SIP number was steady at ₹8,000 crore plus and I would like to believe it would remain steady around that number, simply because it's very granular at nearly 3.2 crore SIP accounts. So, discontinuing few thousand SIPs will also not reduce the overall SIP inflow significantly."

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Published on July 09, 2020
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