As FIIs sold, domestic mutual funds notched their highest investment in last 12 months
The month of December saw highest participation by domestic institutional investors (DIIs) in Indian equities during the calendar year 2014, owing to increased retail participation.
In December, the net domestic mutual fund inflow in equities reached Rs 7,036.90 crore, ahead of Rs 6,957.40 crore invested in August.
A large chunk of domestic mutual funds are through which investors .
In December, the benchmark BSE index fell 2.20% as foreign institutional investors (FII) were net sellers. FII inflows reached a 10-month low in December as investors booked profits and foreign fund managers closed books after year-end bonus calculations.
Net inflows by domestic Mfs have been positive since May as a result of the improved market sentiment, post the general elections and the continuous fall in crude oil prices.
In 2014, the total investments by domestic Mfs in Indian equities were Rs 23,842.70 crore, with the first four months of the year having outflows.
Ajay Manglunia, senior vice-president at Edelweiss Financial Services, said, "The corpus of asset management companies has reached an all-time high in December." Also, the fall in crude oil prices led to the softening of inflation figures.
During the monetary policy review in December, the central bank maintained a dovish stance indicating a rate cut in near future.
Also, with major banks lowering their deposit rates on fixed deposits, the retail investors are moving towards more lucrative investment instruments like mutual funds.
Deena Mehta of Asit C Mehta Investment Intermediates, said, ''Retail investors have become more savvy and are adopting the mutual fund route which is a prudent investment instrument.''
According to her, the overall investment from DIIs this year will be higher than the previous year, thanks to the improved market sentiment and the increased investor confidence.
For the retail participation to sustain, a lot depends on the reform measures to be undertaken by the government and the positives from the finance minister's budget speech. Mehta said market activity before the Union budget 2015 will be high.
"Post the budget, the volume at the bourses will depend on the announcements made in the budget."
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