Investment by mutual funds in domestic equities touched a staggering USD 12 billion in the April-September period on strong retail investor interest, even as foreign investors trimmed their exposure.

Moreover, fund houses are upbeat over investment in the stock markets for the remainder of the current fiscal.

According to the latest data, fund managers bought shares worth a net Rs 76,906 crore (USD 12 billion) in the first half of the ongoing financial year, while foreign portfolio investor (FPIs) pumped in just Rs 5,278 crore (USD 810 million) in equities during the period.

“We should draw comfort from the fact that domestic institutional investors have been net buyers in the markets when FPIs are net sellers giving markets stability,” Himanshu Srivastava, Senior Research Analyst — Manager Research at Morningstar. He said that Indian investors are warming up to investments in equity as an asset class.

Besides, robust inflows from retail as HNIs investors in the equity segment have helped, Anshul Saigal, portfolio manager at Kotak Mutual Fund said.

Fund managers made intensive buying in last two months (August-September), when overseas investors reduced their exposure to the Indian stocks due to several reasons including geopolitical tensions and below expectations domestic growth.

The sell-off by overseas investors in the Indian equity markets has meant an opportunity to fund managers.

During August-September, fund managers lapped up shares to the tune of over Rs 35,000 crore, on the other hand, FPIs had pulled more than Rs 24,000 crore from equities.

According to Saigal, SEBI’s recent move of categorising mutual fund schemes under five broad segments would help in attracting investors to such instruments. He said that this will provide more clarity to investors and help in ending duplication of mutual fund schemes launched by Asset Management Companies (AMCs).

Mutual funds collect money from investors and buy stocks, including IPOs (primary market) and bonds.

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