Domestic mutual funds continue to accumulate stocks in May but buying intensity falls

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The three-month rolling average of equity investments at Rs 10,500 crore by the local mutual funds in May turned positive for the first time in 11 months, the SEBI data show. This has compensated for the selling by foreign investors. It includes exposure to the equity funds, index funds, ETFs, and balanced funds for trades in the secondary market.

However, the buying intensity of the local funds eased in May with a gross purchase of Rs 54,603 crore, the lowest in six months. Their share in the total equity turnover dropped to 4.1% in May 2021, the lowest since August 2020.

Domestic funds had reported a record outflow of Rs 71,680 crore on the three month rolling basis in December 2020 and improved consistently since then. Their gross buy-sales ratio was 105% in May, at par with long-term average.

According to the NSDL data, the value of the equity held by the domestic funds increased by 47% year-on-year to Rs 15 lakh crore at the end of April 2021. The total institutional equity portfolio value was Rs 94.8 lakh crore. Of this, 47.8% was with foreign portfolio investors (FPIs). FPIs sold Rs 12,613 crore worth of Indian equities in the two months to May. Despite that, the Nifty 50 gained 6% during the period aided by the domestic inflows.