INSUBCONTINENT EXCLUSIVE:
A gush of cash from global funds drove a record-breaking rally in the Sensex and Nifty last monthInflows into Indian equity funds shrunk to
the lowest in more than three years last month after the record-hitting rally in stocks despite a faltering economy gave investors
pause.Stock plans received Rs 1,310 crore ($184 million) in November, according to the Association of Mutual Funds in India
That compares with Rs 6,020 crore received in October, and is the smallest since June 2016 when equity inflows fell to Rs 320 crore.A gush
of cash from global funds drove a record-breaking rally in the nation's main equity indexes last month as investors bet the worst of the
economic slowdown may have passed
The gains, driven by a handful of large companies, continue to elude the broader market where retail investors typically focus."Due to the
narrow rally, funds haven't been able to generate returns seen in indexes," said Vidya Bala, head of research and co-founder at
Chennai-based Primeinvestor.in
"Investors still haven't received the broad-based returns they ought to have got, which has slowed down fresh investments."An outflow of Rs
1,845 crore from three categories -- sector/thematic, value/contra, and large - midcap -- led to the overall decline in total inflows to
equity funds, AMFI data show.While global funds may be betting on the economy turning around -- surveys for manufacturing and services in
November have both pointed to a rebound -- their optimism may not immediately rub off onto fund investors, said Ms Bala."As seen in previous
market cycles, retail investors are seldom early to participate in the bottoming of the market," she said
"The mutual fund money comes in much later and is a gradual process."Still, contributions from regular savers into equity funds remained
steady for the fourth straight month at about Rs 8,300 crore versus Rs 8,250 crore in October, AMFI data showed."With markets touching new
highs, some investors took money out," said NS Venkatesh, chief executive officer at the AMFI
"We think they are waiting at the sidelines to reassess the situation to re-enter at lower levels."
