According to AMFI data, collection as a whole mutual fund the market amounted to 14,046.98 crore in October 2022. Meanwhile, the net assets under management (AUM) reached approximately 39,50,323.28 crores as of October 31, 2022.

Collection in UCITS market were driven by steady inflows into equity-based schemes and a slowdown in outflows from debt-related instruments.

The data showed that debt market outflows were around 2,817.79 crore in October compared to an output of a huge 65,372.40 crores in the month of September. The decrease in outflows of debt instruments is explained by a strong inflow of cash around 19,084.60 crores in October 2022 against an outflow of 59,970.30 crore the previous month.

Gopal Kavalireddi, Head of Research at FYERS, said: “Mutual fund data for the month of October 2022 shows a net inflow of Rs 14,047 crore compared to a net outflow of Rs 41,404 crore. last month, mainly due to lower debt outflows.Higher inflows of Rs.19,084 crore in liquid funds were the bright spot in the debt category as investors continued their redemption of various duration funds due to rising interest rates. Overnight, float funds, including bank funds and PSUs, saw large outflows.”

Meanwhile, Kavitha Krishnan, Principal Analyst – Manager Research, Morningstar, said a rising interest rate environment that has been in place since May 2022 has likely led investors to prefer exiting debt markets in favor of to invest in equity. Macroeconomic indicators such as a growing current account deficit, driven by central bank measures to regulate the local currency, and a rising import bill are factors that may have had an impact on the scenario for interest rate in India. Rising commodity, food and fuel prices have also impacted the economy.

Further, Priya Agrawal, Money Coach, LXME (neo-bank for women) said, “In the debt segment, most schemes saw a net outflow of funds, with a large outflow of overnight funds from 7505 crore, followed by low duration funds and short duration funds. This decision could be the result of the volatility in the debt markets due to the scenario of rising interest rates.

For equity-based schemes, the inflow was around 9,390.35 crores in October compared to an influx of 14,099.73 crores in September. Thematic funds, large, small and mid-cap funds have contributed to the inflow over the past month.

In equity mutual funds, Krishnan pointed out that large funds and mid-cap, mid-cap and small-cap funds also saw strong inflows during the month. Although the magnitude of net flows decreased slightly compared to September 2022, this reduction is likely due to outflows to the tune of 8.29 crores by foreign portfolio investors. There also appears to have been profit booking by investors as markets surged in October 2022.

The FYERS expert pointed out that last month’s inflows into equity funds were supported by multiple, larger new fund offerings. He added that “Total net flows into the equity category since the start of this calendar year have represented 151,482 crore, with 88,425 crores in the current fiscal year. This shows investors’ growing appetite for risk, with a preference for equity investments.”

In particular, with regard to cash inflows into equity funds, Agarwal believes that this indicates that, despite market volatility, investors have continued to invest their money in equity-oriented schemes with the aim of generating long-term anti-inflation returns.

In addition, entries into SIPs reached a record level of 13,040 crore — after staying above the 12,000 crores since May this year.

What awaits us?

According to Kavalireddi, during the current earnings season, due to weaker volume growth, high cost inventory and subdued demand, operating margins and net profit margins for most businesses were at rock bottom. This could lead to earnings downgrades by analysts in many sectors. Based on the second quarter results reported so far, the banking and finance sector is seen as the only bright spot, with nearly all public and private sector banks showing excellent growth.

Morningstar’s Krishnan said the global environment remains volatile, driven primarily by multiple factors, including geopolitical instability in Europe, a slowdown in China and rising inflation in the United States. Despite this, the Indian stock markets rebounded in the month of October 2022, with a broad recovery across all sectors.

She added: “India continued to grow, likely driven by growth in private spending after a long lull. posted positive returns for Oct. 2022. That said, challenges continue to exist in the form of rising interest rates, higher inflation and a depreciated rupee.”

Whereas Kavalireddi added that while market volatility continues, with benchmarks currently sitting a considerable distance from their lifetime highs, investors have rested their faith in Indian equity markets and continue to opt for equity investments through direct actions, as well as systematic. mutual fund investment plans.

Disclaimer: The opinions and recommendations made above are those of individual analysts or brokerage firms, and not of Mint.

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