Mutual funds invest whopping Rs 5,234 crore in capital markets in January

Mutual fund managers purchased stocks worth Rs 5,234 crore on net basis in January making it the sixth straight monthly inflow after retail investors continued to put money in equity schemes.

Besides, fund managers pumped in over Rs 31,000 crore in the debt market last month.

According to the data released by the Securities and Exchange Board of India (Sebi), mutual fund managers invested a net sum of Rs 5,234 crore last month. It followed an inflow of Rs 9,179 crore in December, Rs 13,775 crore in November, Rs 9,129 crore in October, Rs 3,841 crore in September and Rs 2,717 crore in August.

Prior to that, fund managers had pulled out Rs 34 crore from the stock markets in July.

Fund managers have been putting in money in the stock market since August last year due to a sharp plunge in equities. They had pumped in over Rs 43,000 crore in stock markets during the period.

Generally, fund managers step up their buying whenever equity markets undergo a sharp correction.

"Such inflows are possible only when retail investors have participated in large numbers by investing in equity funds, viewing the weakness as opportunity," said Vidya Bala Mutual Fund Research Head at FundsIndia.com.

"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," she added.

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.