Mutual fund managers have poured in close to Rs 10,000 crore in equities in the month of November so far amid weakness in the stock markets due to the liquidity crunch post demonetization and negative capital flows from FPI.
The total fund mobilisation reached Rs 31,018 crore in the stock markets during the current financial year (2016-17).
Industry insiders attributed the latest inflow to aggressive buying by fund managers on account of sharp plunge in equity markets.
Generally, fund managers step up their buying trend whenever equity markets undergo a sharp correction.
According to the data released by Securities and Exchange Board of India (Sebi), mutual fund managers invested a net sum of Rs 9,900 crore this month (till November 23).
Fund managers expect the market volatility to continue and they will invest at lower prices.
This comes following an inflow of Rs 8,106 crore in October. They invested Rs 3,841 crore in September and Rs 2,717 crore in August.
Prior to that, they had pulled out Rs 120 crore from markets in the preceding two months (June-July). They had infused Rs 7,149 crore in equities in May while they withdrew Rs 575 crore in April.
"Such inflows are possible only when retail investors have participated in large numbers by investing in equity funds, viewing the weakness as opportunity. In other words, retail investors have reposed faith. Traditionally too, domestic investors have been net buyers when FPIs have sold and the same phenomenon is playing out now," FundsIndia.com, Head of Mutual Fund Research Vidya Bala said.
The BSE's benchmark Sensex has plunged by 6 per cent during the period under review due to uncertainty over demonetisation's impact on the economic growth.
In the entire 2015-16, fund managers had invested over Rs 70,000 crore in the equity markets.
A mutual fund is an investment vehicle with a pool of funds collected from various investors to buy stocks, bonds, money market instruments and similar assets.