Mutual funds hit record net equity investment of ₹91,000 crore in October; Doubles from previous high

Mutual fund houses reached a new record high in net investment in equity for the month of October. After a gross purchase of ₹2,65,045.24 crore equity and gross sale of ₹1,73,612.12 equity, the net investment of the mutual fund reached ₹91,433.12 crore in October 2024, which is the highest in a year.

On the flip side, in debt, net investment saw an outflow of ₹24,773.18 crore. The net investment almost tripled from the previous month’s net investment, which was ₹32,388 crore in September and doubled from the prior high of May at ₹48,139.

Source: SEBI, Values in crore.

The above trend of increased net investment of MF houses has probably helped to cap the losses of the benchmark indices, which were caused by the highest-ever monthly sales by foreign portfolio investors (FPIs), who sold ₹1,10,000 crore. The NIFTY50 and SENSEX dropped by 5.5% in October, its biggest monthly fall in four and a half years.

The possible reasons for such massive investment could be the investors’ strong inflows and continued approach to investing in equity despite FPI outflow. It looks like investors were putting more money into these equity funds to take advantage of the market dip. According to the factsheets of the mutual fund schemes, in September most of the fund houses had seen an increase in their cash holdings. In October fund managers used their cash reserves to buy stocks while prices were falling.

There have been sustained investments by mutual funds in equities in 2024 due to a market rally fueled by heavy inflows into equity schemes. Year-to-date, mutual fund investments have witnessed a net inflow of ₹3,70,000 trillion, as opposed to ₹1,70,000 trillion for the entire year of 2023, according to Securities and Exchange Board of India data.

Mutual funds have been net buyers for 17 consecutive months. This has been made possible by regular inflow through the systematic investment plan route, which saw SIP inflows reach ₹24,509 crores in September 2024 for the first time in two years after the pandemic slump.