Investors became net buyers of equity mutual funds for the first time in nine months in March. The Rs. 9,115-crore net inflow came after consecutive months of net outflows since July 2020.
There were a variety of reasons that led to the reversal of fortunes. Experts cited reasons ranging from last minute tax-saving investments in ELSS to reinvestment of money disbursed from maturing close-ended schemes.
"The money from the closed ended schemes that were maturing in February-March may have been reinvested in NFOs and various MF schemes last month, leading to a rise in inflows," said Jimmy Patel, MD & CEO of Quantum Mutual Fund.
He also pointed out the rise in ELSS inflows as a reason for the surge in inflows.
MFDs also cited ELSS inflows as the driving factor. "Most of it (the inflows) is due to ELSS investments," said Hitesh Kakkad, co-founder of Moneyplus.in.
Rahul Jain from International Money Matters said the stabilising market could have also been a driving force. "Markets have been recovering and making new high every month and it is only by mid-February that it started to stabilise. Investors have the tendency to buy either when the market stabilises or when there is a small correction after a bull run. March was one such month," he said.
However, experts are not very optimistic about the future. They feel the rising Covid cases and the subsequent lockdowns could dampen investors' confidence in equity and equity-linked instruments.
"We don't see customers putting big amount at this point of time, especially as the Covid cases rise," Kakkad said, adding that the inflows could jump in case there's a market correction.
"Due to these lockdowns the April figure might tell us a completely different story as confidence level has again dropped," Patel said.
