It was a May to remember for the stock markets, and not just because of an inflow of Rs 20,000 crore from foreign institutional investors and the UPA win in the elections that cheered traders.
It turns out that domestic mutual funds were also quietly piling up cash in the month that saw the Sensex zoom by 28 per cent.
The average Assets Under Management (AUM) surged by 15.8 per cent, or Rs 86,320 crore in that month, taking the total industry size to a record Rs 638,326 crore. This was apparently helped by both institutional and retail investors. Experts link it to the surge that started in March, since when the Sensex has risen by 80 per cent.
“It is a combination of the rising market and the flow of institutional money,” said Sandesh Kirkire, chief executive officer, Kotak Mahindra AMC, whose assets jumped 31 per cent or Rs 6,691 crore. “The confidence and conviction of the HNIs (high net-worth individuals) and the retail investors in the equity market is coming back.”
The top five fund houses gained significantly and Reliance Mutual Fund crossed the average AUM figure of Rs 1 lakh crore with a gain of Rs 14,342 crore in the month. HDFC was the second biggest gainer with a rise in assets of Rs 11,525 crore.
The top three fund houses contributed 40 per cent of the total industry gain in the assets.
The total gain in the AUM in the month of April and May stood at Rs 145,041 crore.
“The equity flow was poor in 2008-09 but we expect it to be robust in 2009-10,” said Kirkire, saying the market was cheering sound growth prospects in the economy.