InvestorQ : Why have mutual funds been selling so heavily in the equity markets in the last few months?
diksha shah made post

Why have mutual funds been selling so heavily in the equity markets in the last few months?

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sara Kunju answered.
4 months ago
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Indian Mutual funds have been sellers in equity markets for quite some time now and in January they have withdrawn Rs.12,980 crore from the Indian equity markets. This comes on top of the Rs.56,400 crore worth of equity selling by the Indian mutual funds which was already witnessed in the full year 2020.

One of the key reasons is that the equity fund flows from retail investors have tapered to net redemptions since July 2020. This has been a consistent trend in each of the months, although the Jan-21 data is still awaited from AMFI. Indian mutual funds have also been using higher levels provided by the recent rally to book profits and monetize the rally.

Of course, this is not any negative signal or any signal of pressure but normal profit booking that Indian mutual funds indulge in to churn their portfolios. However, the markets have rallied despite the MF selling as foreign portfolio investors infused a sum of Rs.175,000 crore during the full year 2020.

Mutual fund flows may not be as decisive as FPI flows but they represent stable long term investments and savings of Indian investors and we need the flows coming as it represents the returns that Indian investors have been earning on this front.

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