According to Association of Mutual Funds of India (Amfi) data released on Tuesday, net inflows into equity mutual fund schemes fell to 23-month low at ₹ 6,606 crore in December, steepest flow since February 2017 which was at ₹ 6,462 crore. Net inflow to equity mutual fund schemes in December is down 21.48% from previous month and 58.94% from last year.

Investor sentiment is shaken by factors like steep valuations, interest rates, political uncertainty ahead of Lok Sabha elections leading to volatility in equities. Domestic institutional investors (DIIs) bought Indian shares worth ₹ 373.55 crore in December, lower from ₹ 800.3 crore in November. Benchmark indices Sensex and Nifty lost 0.35% and 0.13%, respectively, in December.

Vishal Kapoor, chief executive officer, IDFC Asset Management Company, said that slowdown was expected on account of the year-end holidays where the distribution tends to wind down a bit. “Most of it picks up in the Jan-March quarter when the focus shifts tax saving ELSS funds," he added.

According to D.P. Singh, executive director and chief marketing officer at SBI Mutual Fund, there could be two reasons for decline in inflow of funds into equity schemes. “December is subdued month when activity is low due to holiday season. Also, this time investors seemed to be nervous due to low performance of equities in last two years," he said.

However, those factors did not deter systematic Investment plan (SIP). SIP is an investment plan offered by mutual funds wherein one could invest a fixed amount in a mutual fund scheme periodically at fixed intervals.

According to Amfi data, total amount collected through SIPs in December was ₹ 8,022.33 crore, up from ₹ 7,984 crore in November.

N.S. Venkatesh, chief executive, AMFI said, “Continued upward trend in retail asset under management and monthly SIP contributions are the bright spots this month and reflect strong adherence to disciplined investment behaviour from the retail investor fraternity, inspite of the market volatility."

Redemption pressures in mutual fund equity schemes increased to ₹ 11,234 crore from ₹ 7,200 crore in month-ago period.

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