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3 Things to know from fund flows in 2016
It’s a known fact that stock market movements are caused by big-ticket investors. This includes Foreign investors, Institutional investors in India as well as Mutual Funds. Naturally, the way they invested in 2016 had a big role to play in the Sensex’s 3% return in the year.
So here’s a look:
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Foreign Institutional Investors:
Net investment: Rs. 20,568 Crore
Foreign investors are the biggest players in the market, investing crores of rupees in shares. In 2016, however, things changed a bit. They started by selling shares worth ` 16,647 crore in January and February 2016. They then went on to turn net buyers, investing ` 67,941 crore between March and September. The last three months, however, saw them sell shares in droves. As a result, the net FII investments in Indian stocks stood at ` 20,568 crore or $3.1 billion. This is much lower than the average yearly inflow of $20 billion by FIIs as seen between 2012 and 2014.
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Domestic Institutional Investors:
Net investment: Rs. 37,152 Crore
The year 2016 was different for another reason. In 2015, Domestic Institutional Investors (DIIs) invested heavily in stocks—around ` 67,000 crore. This compensated for the fall in investments by foreign investors. This did not continue in 2016. They only invested ` 37,152 crore in 2016, just a little more than half the previous year. While they invested more than FIIs in 2016, they were not the biggest players in the market.
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Mutual Fund investments in Equity:
Net investment: Rs. 45,373
The biggest players in the market in 2016 were Mutual Funds, investing around ` 45,000 crore in the year gone by. This is much higher than the net investment by FIIs and DIIs, making Mutual Funds a major investor in the stock market. This is because retail and small investors invested heavily in Equity Funds in 2016. Between April and November, they invested ` 73,000 crore in Equity Funds. This means retail investors played a big role in the markets in 2016.
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27%
Mutual Fund Managers preferred to invest around 27% of their assets worth ` 5 lakh crore in the banking and financial services sector. Other major sectors were Auto, IT, Pharma and Consumer goods. This is as per SEBI data, as of November 2016.
