The gross purchase of equities by the domestic fund managers in the secondary market reached Rs 83,006 crore in June compared with the five-year average of Rs 58,187 crore, the data from SEBI showed. The gross purchase in a single month in June is the second highest after Rs 1.2 lakh crore in March 2020.
The equity exposure of mutual funds includes equity funds, index funds, exchange traded funds (ETFs), and balanced funds for trades in the secondary market. The domestic funds chose to increase allocation amid the selling by foreign funds. The elevated purchase lifted the gross buy-redemption ratio of local funds to 1.08 in June 2021, which was a tad better than the long-term average of 1.06 reflecting easing redemption pressure.
Net deployment by local funds in the equities was Rs 6,437 crore in June, the highest in 13 months. This was the fourth month in row when local funds were net buyers in equities. Their cumulative net investment at Rs 17,212 crore was slightly higher than the inflow of Rs 15,083 crore by foreign portfolio investors in the said period.
As a result of a sustained fund deployment and capital appreciation, the equity assets under management (AUM) of the local funds rose to a record Rs 16.6 lakh crore in June 2021, a gain of 55% in a year, according to the NSDL data. It was 7.6% of the total market capitalisation of Indian equities.