The on going Indo-pak escalations after the Pulwama terror attack and the looming uncertainties regarding the upcoming general election 2019 seems to have dented the mutual funds market. As inflow in equity mutual funds, including equity-linked savings scheme fell to a 25 month low to just ₹5,122 crore inflow February.
This is fourth straight monthly fall in the total equity inflow. Last time total inflow increased was in October 2018 when it touched ₹12,622 crore. Total equity inflow dipped over 16.8% in February as compared to previous month.
The other reason behind this trend could be the Systematic Investment Plans (SIPs) that have matured or stopped is also going up. Also, that people who’ve stopped their SIPs or are not renewing them, could also be withdrawing their corpus.
Notably, Nifty50 also fell for consecutive third month owing to election related uncertainties and the recent spate of Indo-Pak escalating tensions.
Overall, mutual fund market witnessed a total outflow of ₹20,083 crore compared with an inflow of ₹65,439 crore in January. The most of the outflow of mutual funds was led by liquid or money market. In last month in February investors withdrew ₹24,509 crore from such schemes (SIPs and mutual funds) against an inflow of ₹58,637 crore in January.