November’s Record Stock Market Rally Impacts Equity Mutual Funds: Dive In Now!

Despite the record-breaking growth in the stock market, there has been a decrease in investments in equity mutual funds in November. However, the Systematic Investment Plan (SIP) has reached an all-time high, suggesting that investors are turning to this alternative.

It is important to note that the decrease in equity mutual fund investments cannot solely be attributed to increased SIP investments.

Decrease in Equity Mutual Fund Investments in November

  • According to the Association of Mutual Funds in India (AMFI) data, investments in equity mutual funds on a monthly basis decreased by around 22% to approximately INR 15,500 crore in November.
  • In comparison, investments in equity mutual funds in October were around INR 20,000 crore, and in September, they were approximately INR 14,400 crore.
Impact of Record Stock Market Growth on Equity Mutual Funds in November

Possible Reasons for the Decrease

  • The decrease in equity mutual fund investments during November can be attributed to the festive season, as well as bank holidays, which may have led to a decrease in investor confidence and fear of a market correction.
  • It is generally observed that there is a decrease in investments in mutual funds, including equity funds, during the month of December or between December and January, as the market tends to be at an all-time high during this period.

Increase in SIP Investments

  • Despite the decrease in equity mutual fund investments, SIP investments have witnessed significant growth.
  • In November, SIPs reached an all-time high, surpassing INR 1,000 crore through equity inflow, which was lower than the previous month’s figure of INR 1,928 crore.
  • The majority of investments in equity mutual funds are directed towards mid-cap and small-cap funds. In November, the highest investments, amounting to INR 3,699 crore, were made in small-cap equity funds, followed by INR 2,666 crore in mid-cap equity funds.
  • Sector or theme-specific funds attracted INR 965 crore, while large-cap funds received INR 1,353 crore in inflows.

Despite the decrease in equity mutual fund investments in November, concerns about the market correction or decrease in investments are not evident until the release of the next few months’ data.

The inflows in mutual funds have reached a total asset under management (AUM) of INR 49.04 lakh crore across all 42 mutual fund companies in November. This suggests that investors are still utilizing the safe harbor of mutual funds to benefit from the stock market growth.

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