Rising net SIP inflows point to return of retail investors

Suresh P. Iyengar | | Updated on: Aug 06, 2022

Net inflow at ₹8,600 crore in June accounted for 70 per cent of gross flow of ₹12,276 crore

It is not just the foreign portfolio investors who are flocking to the Indian equity market but also the retail investors in mutual fund through systematic investment plan.

The net inflow through systematic investment plan has increased five per cent to ₹8,600 crore in June against ₹8,155 crore in May. This is despite the gross inflow falling to ₹12,276 crore in June against ₹12,286 crore logged in May, as per the data sourced from the Association of Mutual Funds in India.

The net SIP inflow is the difference between gross inflow and outflow from the SIP accounts.

The net inflow accounted for 70 per cent of gross inflows in June indicating that the SIP stoppage and redemption are slowing.

Interestingly, the net inflow had dipped 6 per cent in April to ₹6,705 crore against ₹7,128 crore logged in March. However, the tide started changing and the net inflows jumped 28 per cent in June compared to April even as the gross inflow increased just 3 per cent from April level of ₹11,863 crore against ₹12,276 crore in June.

Market bounces back

The active SIP accounts increased 3 per cent in June to 5.55 crore against 5.39 crore logged in April. The industry has added 59.50 lakh new SIP accounts in June quarter, while 32.34 lakh were closed.

The return of the retail mutual fund investors coincides with the equity market bouncing back from its low with rising inflow from the FPIs. After being net sellers to the tune of ₹51,422 crore in June, FPIs turned net buyers in nine months by investing ₹1,971 crore in July as the falling input cost and drop in crude oil boosted institutional investors’ economic outlook on India.

The bullish trend of FPI investment continues in August as the inflow into equities touched ₹14,175 crore in the first week of this month.

VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said there is a complete reversal of FPI activity in the Indian stock market, and change in their strategy has imparted strength to the recent market rally. The decline in the dollar index from the high of 109 last month to dipping below 106 now is the principal reason for the FPI inflows, he said.

Published on August 06, 2022
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