Is the charm of equity markets declining? Well, as per the recent AMFI data, the net inflows to equity mutual funds have dropped to 12-month lows, and this is the fourth consecutive month of lower inflows. The April inflows are at Rs 24,269.26 crore, down over 3% from March inflow of Rs 25,082.01 crore.
Himanshu Srivastava – Associate Director- Manager Research, Morningstar Investment Research India, explained that, “This softening is likely driven by mounting global uncertainties, particularly the intensifying U.S.-led tariff war and the deteriorating regional security climate. These factors have led some investors to adopt a cautious stance. The quantum of flows however, remains significant, especially in the backdrop of escalating geopolitical tensions between India and Pakistan following the Pahalgam terrorist attack on April 22.”
Dr. Vikas Gupta, CEO & Chief Investment Strategist at OmniScience Capital pointed out that, “However, small caps and midcap funds continue getting larger inflows compared to large caps. Given that the large caps are, typically, higher quality companies and are broadly available at a larger discount to their intrinsic values, it would have been better if investors allocated to them more.”