The 'Modi premium' on equity inflow and rising SIP numbers

Mutual fund investors have shown resilience and faith in domestic equity markets at a time when foreign investors seem to be looking elsewhere. Since January to April-end 2018, net inflows in domestic equity mutual funds are slightly over Rs 50,000 crore compared to nearly Rs 29,000 crore for the same period last year. This comes on the back of regular systematic investment plan (SIP) inflows increasing to Rs 7,119 crore in March 2018 as compared to a monthly inflow of Rs 4,335 crore in March 2017. The number is significant given that while Rs 43,600 crore was invested in equity mutual funds in March 2018, as much as Rs 39,000 crore flowed out, leaving a net inflow number of Rs 6,600 crore. The lump sum redemptions, experts said, had more to do with the impending implementation of longterm capital gains tax starting April 2018. With continued SIP support and additional buying, net inflows in April shot back up to around Rs12,400 crore for equity-oriented schemes. Equity investments In April 2017, SIP inflows were roughly 45% of net inflows into equity schemes, they are up at 54% for April 2018. It does look as if money invested through this route is here to stay across m

This article was originally published on May 19, 2018.