Mutual funds buy shares worth Rs 6,000 crore in Oct amid stock market rally

Mutual funds pumped in close to Rs 6,000 crore (about US $1 billion) in the domestic equity market during October, continuing their buying spree for the sixth straight month amid a market rally.

As per the latest data compiled by the Securities and Exchange Board of India (Sebi), mutual funds purchased shares worth Rs 17,483 crore in October, while they sold stocks worth Rs 11,543 crore - a net inflow of Rs 5,940 crore.

Industry experts attributed the inflows in equities to improvement in market sentiments, primarily due to the Prim Minister Narendra Modi-led government's reforms agenda.

Besides, retail participation in equity schemes has increased significantly in the past few months.

This is the sixth consecutive month when mutual funds have been net purchasers in the stock market.

"The money in equities started coming in from the second half of May, after the announcement of General Election's verdict, and the momentum has continued till date," said a market expert.

A mutual fund is an investment vehicle made up of a pool of funds collected from many investors. The funds are invested in stocks, bonds, money market instruments and similar assets.

MFs invested a net of over Rs 4,100 crore in September, close to Rs 6,000 crore in August, Rs 5,000 crore in July, Rs 3,340 crore in June and Rs 105 crore in May, according to data realeased by the capital market regulator.

Prior to that, they had been net sellers in the equity market since September 2013. MFs were net buyers of shares worth Rs 1,607 crore in August 2013.

The latest net inflow in the equity market is in line with the benchmark Bombay Stock Exchange (BSE) index Sensex gaining 4.6 per cent in October.

In the first 10 months of 2014, mutual funds have purchased net shares worth over Rs 14,000 crore.

In the 2013-14 financial year, MFs offloaded shares worth Rs 14,208 crore, lower than Rs 22,749 crore offloaded in FY13.

The financial year ended March 31, 2014 also marked the fifth consecutive year of net outflows by mutual funds in the equities after they had pumped in a net amount of Rs 6,985 crore in the share market in 2008-09.