Is it true that mutual funds have been selling in equities in the months of July and August?

If you look at the daily FII / MF flow numbers, it is quite clear that domestic MFs have been selling. In fact, mutual funds have pulled out Rs.17,600 crore from equities in the months of July and August 2020.

This is in sharp contrast to the January to June period this year when during the peak of the COVID crisis, Indian mutual funds had made a net investment of Rs.39,755 crore into equities. What exactly has been the reason for this big change in sentiments?

Apart from liquidity considerations leading to MF redemptions, a big shift to direct equities was evident from the sharp spurt in the number of demat accounts. Another factor is equity MF redemptions, which stood at Rs.19,000 crore; including the aggressive hybrid funds.