After remaining hesitant for the past nine months, retail investors made a comeback in the stock market last month through equity schemes of mutual funds. The schemes witnessed an inflow of Rs 514 crore in March by retail investors, ending a trend of continuous outflow of funds from such schemes in the previous nine months.
"There is a section of investors which believes that volatility is nature of stock market and if they remain invested for longer term, stocks will give better returns," said Lalit Nambiar, fund manager and head-research, UTI Asset Management Company.
Equity schemes of mutual funds saw net outflow of R13,496 crore during June 2012-February period according Association of Mutual Funds in India data. In the previous financial year (2012-13), May was another month which witnessed net inflow of funds. Retail investors chose to withdraw funds from equity schemes during April -December 2012 because of gains in stocks. Sensex moved in upward from 17,478 on April 2 to end higher at 19,500 at the end of December 2012. Retail investors used this rise to book profit and come out of stock.
"Upside in stocks during April to December gave investors a chance to exit the market, who had entered in such schemes during peak of 2007 and later stuck in the crash that followed due to global slowdown," said a fund manager of an Asset management Company.
Due to continuous withdrawal of funds, equity schemes of mutual funds saw net outflow of R2,931 crore in 2012-13.
Experts believe that it is too early to term it as turnaround.
"We cannot say that confidence of retail investors is back, based on the figures of one month's net inflow, We should wait for the figures of a few more months," said Nambiar.