BENGALURU (Reuters) - Inflows into India's equity mutual funds moderated to a four-month low in April, with investors adding small- and mid-caps, while trimming large-cap allocations.
Net equity mutual fund inflows fell 16.4% sequentially to 189.17 billion rupees, the lowest since December 2023, data from the Association of Mutual Funds in India (AMFI) showed on Thursday.
Equity mutual fund inflows had seen a similar drop in March, mainly over high valuation concerns, which prompted the markets regulator to flag froth in the segments.
The controls put in place by the Securities and Exchange Board of India (SEBI) seemed to have allayed valuation concerns in small- and mid-caps, said AMFI Chief Executive Venkat Chalasani.
Results of stress tests conducted by fund houses in March and mostly in-line fourth-quarter earnings have brought back investors into the segments, said Narendra Solanki, head of fundamental research of investment services at Anand Rathi Shares and Stock Brokers.
Domestic equity mutual funds have seen net inflows every month since February 2021, aggregating to 5.16 trillion rupees, well above net foreign inflows worth 323.82 billion rupees, over the same period.
The benchmark NSE Nifty 50 has risen about 56% over these last 38 months, aided by mutual fund inflows.
Investor interest in small-cap funds returned in April, rising to 22.09 billion rupees, after seeing outflows for the first time in 30 months in March.
Mid-caps saw inflows worth 17.93 billion rupees, rising 76.1% from the previous month.
Meanwhile, large-caps saw inflows drop 83% to 3.58 billion rupees, a four-month low.
Aided by the return of mutual fund buying, small- and mid-cap indexes rose 11.4% and 5.8%, respectively, in April, outperforming the benchmark Nifty 50, which rose about 1.25%.
Contributions into systematic investment plans (SIPs) hit a record high of 203.71 billion rupees in March, hitting all-time highs for the 16th time in 19 months.
(Reporting by Bharath Rajeswaran in Bengaluru; Editing by Sohini Goswami)
