Despite a constant decline in new SIP addition, systematic investment plan inflows of ₹48,565 crore in the first four months of this fiscal year accounted for 42 per cent of gross inflows of ₹114,427 crore in equity schemes.
The number of new SIP account addition had slipped progressively since April due to SEBI’s unprecedented ban on launch of new fund offer in the first quarter of this fiscal.
New SIP account opening has fallen 20 per cent to 17.42 lakh in July against 21.82 lakh logged in April. Interestingly, number of SIPs discontinued or matured fell just two per cent to 10.37 lakh in July against 10.53 lakh in April though it peaked to 11.45 lakh in June, according to the Association of Mutual Funds in India (AMFI) data.
Most investors in smaller cities prefer to start new SIP at the NFO period as they believe units are available for as cheap as ₹10 and can accumulate more units as fund houses build up a meaningful portfolio, said Yogesh Dawal, an independent MF distributor from Sholapur.
Moreover, he added getting small investors to cut a cheque for an SIP in an existing equity scheme where units are quoted above ₹30 is very difficult as the concept of selling ‘old wine in new bottle’ does not work in small towns.
CHANGE IN MARKET TIDE
The overall outstanding SIP accounts increased four per cent in July to 5.62 crore against 5.40 crore registered in April as the net new account addition was higher than discontinuation.
Thanks to dramatic increase in foreign portfolio investors, the SIP asset under management, which was on a downtrend, had jumped five per cent to ₹6.09-lakh crore in July against ₹5.78-lakh crore recorded in April.
Interestingly, the SIP AUM was down five per cent at ₹5.51-lakh crore in the first quarter of this fiscal as FPIs sold their equity investments.
VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said the sentiments in the market have turned bullish due to the sustained buying by FPIs who turned net buyers since July and became more aggressive buyers on all sessions in this month, he said.
FPIs have made a cumulative investment of ₹18,828 crore through stock exchanges so far this month as dollar index declined from above 109 in July to around 105 in August leading to capital flows to emerging markets with India being most preferred due to its growth prospects, he added.
The dollar index denotes US dollar movement against a basket of currencies including euro, Swiss franc, Japanese yen, Canadian dollar, British pound, and Swedish krona. An index value of 120 suggests that the US dollar has appreciated 20 per cent against the basket of these currencies.