Stock funds in India lured record money amid poll volatility

By Ashutosh Joshi

Inflows into Indian equity funds surged to record high last month, with retail investors brushing aside a spike in stock volatility before election results.

Mutual funds received 34,700 crore rupees ($4.2 billion) of inflows in May as investors plowed money for a 39th month, according to data released by the Association of Mutual Funds in India.

Equity investments by individual investors in India are on a rise as returns beat traditional investments such as fixed deposits and bonds. The inflows came even as concerns over a stable government after elections drove up volatility in markets.

Monthly recurring plans emerged as the most popular product among retail investors, adding almost $2.5 billion of flows on net basis to stocks.

“While recent data has shown a dip in household savings in India, systematic investment plans have continued to pick up,” AMFI Chief Executive Venkat Chalasani said on a conference call.

HDFC Manufacturing Fund, which was introduced during the month, received more than 9,500 crore rupees of subscriptions.