July was the fifth month in a row when local funds remained net buyers in the secondary market. With a strong inflow in July, the six-month rolling average of net investments by local funds has turned positive for the first time in ten months.
The gross investment by local funds at Rs 84,824 crore in July was the second-highest after March 2020 when they had invested Rs 1.2 lakh crore. This drove the gross buy-sell ratio — a measure of the extent of redemption pressure — to 1.2 compared with the long-term average of 1.06.
A sustained deployment by local funds has partially offset the effect of moderation in the flow of foreign portfolio investors (FPIs). On a net cumulative basis, local funds have invested Rs 32,649 crore in the past five months while FPIs invested Rs 3,775 crore.
Domestic funds have total assets under management (AUM) of Rs 33.6 lakh crore, of which the direct equities funds have an AUM of Rs 11.1 lakh crore in June 2021.
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