Equity mutual funds witnessed an exit for the fifth consecutive month, as redemptions intensified in earnings reserve despite benchmark indices climbing all-time highs.
Net outflow from stocks and equity-linked mutual fund schemes stood at Rs 12,917.36 crore in November compared to an outflow of Rs 2,724.95 crore in October, according to data released by the Mutual Fund Association in India. That’s the biggest output at least since April 2018, when AMFI started compiling data in the current way.
“This is mainly due to the profit reserve. People believe that there is a lot of movement in the stock markets and they are trying to seize and get money off the table. The stock market has moved up pretty fast, so people are making a profit, ”said NS Venkatesh, CEO of AMFI.
First, fears of the impact of the Covid-19 pandemic on businesses and then investors who reserve earnings dragged net investments into equity funds over the past few months. That too when stock markets soared. In November, the Nifty 50 gained 11.3%. The indicator even surpassed the 13,000 mark for the first time, erasing all the losses caused by the pandemic, in hopes of a possible Covid-19 vaccine and a faster-than-expected economic recovery. Foreign investors have driven the rise, racking up a record $ 9.6 billion in Indian stocks in November. The Sensex also gained more than 11% last month.
“It is understandable that people are taking money out of equity-oriented schemes right now. From a valuation standpoint, the stock markets seem highly valued. We are currently around 32 [times] PE for Sensex, ”said Harshvardhan Roongta, certified financial planner and founder of Roongta Securities. “We have people who called us to ask us whether to post earnings. But our view is that if you don’t need money for the next three or four years, it should stay invested, “said Roongta.
