After witnessing moderate inflows as well as outflows in the first five months of this year, activity in equity funds has gathered pace in June. Both fresh sales into these funds, at Rs 920 crore and redemptions at Rs 1007 crore are at a 28 month high. On a net basis, however, Rs 87 crore moved out of the equity funds' category as against a net inflow of Rs 65 crore in May.
Much of these investments may be due to the tendency of equity fund investors to take notice when markets have rallied. Over the month of June, the BSE Sensex has gained 13.41 per cent and the broader S&P CNX 500 move up 10.82 per cent. The BSE Midcap Index too rose by 9.96 per cent. As a result the category of diversified equity funds is up 10.30 per cent in June. In fact, in the first six months of this year these funds have gained, on an average, 18 per cent.
The redemptions may also be accounted for by this rally. In the previous months, when markets have been at rock bottom levels, equity funds have been receiving some inflows. For many investors the current gains represent a fast buck and it is time to cash out. Thus, the strong tide of redemptions.
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