Equity mutual funds saw huge outflows—of more than Rs8,000 crore—in March 2016. Mutual funds have been net buyers in the past; they reported a net outflow for the first time in 23 months. Despite this significant outflow in the last month of the fiscal, in FY15-16, equity mutual funds reported net inflows of more than Rs68,000 crore. In FY14-15, they registered a net inflow of a little more than Rs40,000 crore. Experts reckon that the fund outflows in March could be due to profit-booking and the fact that many banks and corporates would have pulled out their investments in view of the financial year-end.
The behaviour of foreign institutional investors (FIIs) was quite different. FIIs were net buyers in March; they invested more than Rs21,000 crore in the month. They had been net sellers since the past nine months. March has been a superb month for Indian equity investors; the benchmark index delivered more than 10% returns during the month.