Inflow Declines Revealed
Data from the Association of Mutual Funds in India (AMFI) revealed notable declines in inflows across various fund categories during October. Large-cap
funds experienced a substantial decrease of 58%, with inflows dropping to ₹971 crore, significantly lower than the ₹2,319 crore received in September. Mid-cap and small-cap funds also saw reductions in their monthly inflows, declining by 25% and 20% respectively. Mid-cap funds attracted ₹3,807 crore in October, a decrease from the ₹5,085 crore the previous month. Similarly, small-cap funds saw inflows of ₹3,476 crore in October, down from ₹4,362 crore in September. These figures underscore a broader trend of investor caution and a possible shift in investment preferences during the period.
Fund Performance Overview
Despite the decline in inflows, October showed positive performance for many fund categories. Large-cap funds delivered an average return of 3.07%. Among the 33 large-cap funds evaluated, Bajaj Finserv Large Cap Fund led the way with a notable return of 4.05%. Mid-cap funds performed slightly better, averaging a return of 3.19%. Sundaram Mid Cap Fund stood out in this category, offering the highest return of 4.53% among the 31 mid-cap funds assessed. Small-cap funds also performed well, providing an average return of 2.81%. Within this segment, TRUSTMF Small Cap Fund showed the most impressive performance, yielding a return of 5.09% among the 31 small-cap funds measured. These figures indicate that, while investor interest cooled, the market overall remained relatively buoyant during the same period, with specific funds exceeding the average returns.
Market Index Performance
The broader market indices also exhibited positive movements in October. The BSE Sensex and Nifty50 both recorded gains, increasing by 3.65% and 3.57% respectively during the month. The Nifty Midcap 150 - TRI and Nifty Smallcap 250 - TRI, representing mid-cap and small-cap segments respectively, also showed growth. These indices rose by 3.91% and 2.66% during the same timeframe. The performance of these market indicators provides a context for understanding the fund inflows. While the market generally performed well, the decline in fund inflows suggests that investors were either opting for different investment strategies or becoming more risk-averse, despite overall market gains. This divergence underscores the importance of interpreting fund flow data within the broader market context.
Investor Sentiment Analysis
The decrease in mutual fund inflows during October can be attributed to several factors, primarily reflecting a shift in investor sentiment. The market observed a tendency for investors to turn more cautious and book profits, particularly given the preceding period of market gains. Many investors appeared to prefer diversified or safer investment options, indicating a preference for reduced risk exposure. This shift in investor behaviour explains the reduced inflows into large, mid and small cap funds. The data suggests that investors might have been reallocating their assets to better manage their portfolios, considering the volatility and outlook of the markets. The broader market gains, while positive, did not translate into increased inflows as investors chose a more defensive stance.
