October accounts for one-fourth of total FII inflows this year

New Delhi: Foreign institutional investors (FIIs) infused a record $6.4 billion in October, accounting for nearly one-fourth of the total inflows came in stock market so far this year, reports PTI.

As per the data available with capital market regulator Securities and Exchange Board of India (SEBI), overseas fund houses were net buyers of Indian equities worth $6.42 billion (Rs28,562 crore) during the current month, the highest amount pumped in by the FIIs in any single month.

With this heavy inflow in just one month, the total net investment by FIIs on the local stocks now stands at $24.79 billion (Rs1.12 lakh crore), the highest in a single year.

Market experts said the inflows of overseas funds will not stop here only as they have the opportunity of the better rate of returns in emerging economies like India. This heavy inflow is causing appreciation in the local currency.

"Capital inflows into the country will be higher in the second-half of the fiscal and the rupee will appreciate up to INR 43.44 by end-FY 11 from the current INR 44.60, domestic brokerage Unicon Financial said, quoting a Crisil report.

Crisil expects the country's gross domestic product (GDP) to grow by 8.2% in the current fiscal and continue with the same momentum for the next decade, courtesy the consumption arising out of India's demographics.

However, the heavy inflows in October failed to lift the BSE benchmark Sensex this month. The 30-share index fell 0.2% in October, first monthly drop after May.

The Sensex had gained over 10% in the previous month, a period during which FIIs invested a net $5.42 billion (Rs2,4978 crore). Analysts said the mega Rs15,000 crore IPO by Coal India was a major reason behind the diversion of foreign funds from secondary market to the primary market.

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October heat: Equity MFs continue to leak cash

The steady leakage of cash from equity funds has continued in October; debt funds maintain robust asset growth

The alarming outflow of cash from the coffers of equity mutual funds continues unabated. For the fifth straight month since June 2010, equity funds have witnessed cash haemorrhage to the tune of Rs5,727 crore. Meanwhile, debt funds enjoyed net inflows of Rs17,310 crore for October, marking yet another month of growth in assets under management (AUM).

Over the past 12 months now, equity mutual funds have recorded net outflows amounting to a whopping Rs31,500 crore. Only in three months during this period did equity funds record net inflow of cash, which was mostly due to the number of new fund offerings. While investors have parked Rs11,532 crore so far in the month of October, they have withdrawn Rs17,259 crore at the same time, piling on the agony for fund companies.

On the other hand, debt schemes of mutual fund companies are seeing a period of robust growth in assets. Another month of inflows has meant that debt funds have added a phenomenal Rs1,63,200 crore in assets over the last 12 months. This month, investors have parked Rs50,917 crore in debt schemes, while redemptions have touched Rs33,607 crore so far.

Interestingly, this has played out during a period which has seen the stock markets march on smartly to recapture previous highs. Equity funds are normally expected to benefit from such widespread optimism in the markets. However, what has happened is just the opposite. Investors have favoured debt funds over equity funds despite the steady rise in stock prices. To put things in perspective, equity funds have attracted purchases amounting to around Rs1,60,000 crore over the last year compared to debt funds which have witnessed purchases to the tune of nearly Rs7,20,000 crore in the same period. It is pertinent to note, however, that most of this surge in debt fund assets has come from banks and institutions choosing to park excess liquidity in this category. Debt funds have also been aided by the rising interest rate scenario during the past six-eight months.

After the ban on entry load last year, the outflow of money from fund schemes accelerated since most financial advisors could not get incentive to sell and service funds. Yet, industry leaders have been defending the new system publicly by arguing that the system would adjust to paying commissions, sooner than later. Industry leaders have also been trying to explain away the continuous haemorrhage of funds as 'profit-booking'. However, the fact is that whether the market was down or up, investors have been selling.

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COMMENTS

Ranjan D Gupta

6 years ago


Dear Mr.Sunil Date,

In reply to your comments I would like to say that first of all all IFAs are not greedy.Basically IFAs want to build long term relationship with their clients and it is not possible by mis-selling some products.Actually investors suffered maximum who used to take advice from institutional advisors like Brokers and Banks. There relationship managers are not bothered about the financial welfare of an investor.They use to sell schemes as per the management's decision and their intention is only to get promotion or incentive.Instead of abolishing entry load SEBI should have taken measures to control structure of commission were being offered by AMC. Why SEBI allowed AMCs to frame different commission sturcture for different schemes.Why SEBI failed to bring uniformity in commission rates accross the MF industry?.If all equity fund would offer uniform rate;say 2% for all equity schemes then question of mis-selling would not have arisen.In such instance all Advisors either individual or Institutional would sell only those schemes whose performances were good.SEBI should have thought in this direction.Even if SEBI felt that 2% is a higher it can reduce to 1.50% for the benefit of investors.Everything was open to SEBI's eye then why SEBI kept mum for years.
It is fallacy to think that educating investors will change to whole atmosphere of investment in MF.The world famous Investment advisor for various international Pension Fund has rightly commented that the NPS scheme introduced by Govt will brace sheer failure unless they appoint intermediaries.In the same way MF industry will also not grow without Advisors
Thanks

Ranjan D Gupta

6 years ago

Dear Mr.Sunil Date

Your comments are very much immature.I understand that you are not actively connected with the MF industry.It is the failure of SEBI to project the fact the investment is MF is risky and require vast knowledge and information to invest.SEBI should therefore advise investors to take suggesstion from Financial Advisors.On the contrary SEBI is projecting financial advisors as greedy self contained people.At the same time SEBI is telling IFAs to go to the investors and ask for fees for their service which IFAs cannot decide.Whether Investor will give Rs.10 or Rs.200 depends on investor's decision.Can you explain what kind of profession is this?.After giving service and advice IFAs need to beg for their remuneration.There is a truth that every investor should understand "Investment in MF in a particular scheme does not guarantee that the scheme will do well throughout the lifetime.Scheme may do well today but may become underperformer in future.Who will track this.Only IFAs can help the investors.So investors should pay fees for ensuring better performance of their investments.

REPLY

Sunil Date

In Reply to Ranjan D Gupta 6 years ago

@RD Gupta. I do not know whay you find my comment immature. I am a financial planner and hv been dealing in MF for the past 5 years.
Whilst there are genuine IFAs, you cannot deny the fact that there are greedy IFAs too. I know of a customer who has invested Rs 5K to 10K in about 20MFs including international funds w/o having an iota of an idea of what it is.
Does a doctor /lawyer/CA come and beg you for remuneration ? Does somebody else decide what fees they should get ?
SEBI / NSE / MF are implementing a lot of investor awareness programmes on TV and in camps.

e

6 years ago

Mr bhave aab to jago or EGO jaane do....

tumne to MF industry aur small investors ko barbad kar diya........

Santhana

6 years ago

Bhave the Gulam/chamcha of FIIs and PN holders and Stock Brokers should be complimented for killing the MF industry and small investors investing through SIP and MFs and the independent Financial Advisors. For this service he and his cahoots should be adequately compensated with doubling of salaries with retrospective effect (SIC). These people (SEBI) do not have any shame and like organised crime, corruption thrives in India and no doubt we are listed as one of the most corrupt countries in the world.

REPLY

Sunil Date

In Reply to Santhana 6 years ago

@ Santhana, ur comments are not in good tatse. Whilst one may disagree with the SEBI's stand, do not cast aspersions on the character of Mr Bhave unless u have some proof.

What has SEBI said " get your commission directly from the customer, commensurate with the service you offer" Why should the charges be pre-decided and front loaded ? My question was how will the mutual fund industry spread it self to rural area with this model.

girish prasad

In Reply to Sunil Date 6 years ago

as previosly my broker was paying me half to one percent unofficially and if he ask me today to pay something then why should i pay / i will stop the investment in mf . thats i have done.
sebi /amfi had raised the fees ten times ? why?
it should be determine by members that as how much is to be pay to sebi/amfi as per there service rendered? is it logical? same logicis with ifa

Sunil Date

In Reply to girish prasad 6 years ago

In India every one wants free software and free advise. will you ask your doctor for cut back because he may be getting some payoff from the pharmaceutical companies for recommending their medicene ? Do you ask a cut back from your corner kirana store because he is getting 25% commission ? If you do not want returns commensurate to beat inflation and taxation it is your decision; pl go ahead and invest in FDs and post office.

Akhil Khanna

6 years ago

The mutual funds buy or sell shares based on movements in the market which today is governed by speculators with deep pockets eg. FIIs.

It is a good thing that the small investors are taking their savings out of the casino (stock and commodity markets) and opting for protecting their hard earned money.

It would serve them better to keep their money in fixed deposits for the next 5 to 10 years. Their money will surely and steadily grow and they would not have to suffer the pains of watching their net worth fluctuating with the markets.

http://www.marketoracle.co.uk/Article236...

girish prasad

6 years ago

small investors are existing from mf and this way target is acheived by authourities on the name of small investor.in 1 or two year mf will become the jagir of hni and fi and other than small investors.
then bhave will will be remebered as most hated in distributer but popular in paisewalas

REPLY

Madhusudan Thakkar

In Reply to girish prasad 6 years ago

In today's" Mint "there is an report"SEBI proposes 50%-90% HIKE in salaries of all employees with RETROSPECTIVE effect from 1st November 2007" On the one hand.distributors are struggling for "livelihood".Small investors are no more interested we have this Diwali bonanza for employees.THIS IS JUSTICE IN INDIA UNDER"ECONOMIST PM"

Roopsingh

In Reply to Madhusudan Thakkar 6 years ago

we as a nation called Great india(MERA BHARAT MAHAN)are going to fail a sa nation sooner rather then later because of these beurocrats and politicians-now we have many JAYCHANDS in our country then that old Jaychand who helped enemy to defeat Prathviraj chouhan-corruption will make this country a colony of china in near future

roopsingh

6 years ago

sorry for type error in reply to Debashis sir.pl read (favoritism to stock terminals in place of favoritism to mf).

shankar

6 years ago

mutual fund go to hell...MLM companies Zindabad.I now work for MLM companies...previously i worked for MF as a broker.all this has happned for for bhave.people witdrawing money from MF and investing in MLM companies....Unipay2u...Visarev etc...can mr bhave do anything...ha ha....he can do nothing.....yahoooo

REPLY

Yogesh

In Reply to shankar 6 years ago

Indeed MLM [Maoist,Leninist,Module] ZINDABAD.Now I understand the REAL reason of Maoist popularity

Asit

In Reply to shankar 6 years ago

I sincerely thanks to Mr.C.Bhave for safeguarding Aam Aadmi from so called incompetent MF & insurance advisor.

shankar

In Reply to Asit 6 years ago

Ur Aam Admi..U know one thing that ur being looted in every phase of ur life.U pay tax genunely i think but do u think that those burecrates pay their tax genunely.Ur hard earned money is eaten and digested by those people......U will always remain a aam admi and shut ur mouth to raise any thing against corrouption etc...because ur a aam admi,u love to get looted

Roopsingh

6 years ago

Thanks Mr Bhave for ethnic cleansing of IFAs from MF industry-this is surely resulting in bleeding of MF assets since last august2009-continuous reduction in AUM has never been so continuous in history of MF industry since Mr Bhave put this death nail to prepare coffin by eliminating entry load-i have joined a new job this month because i was not able to sustain for my family expanses-i am in MF industry since last 7 yrs but last 2 yrs have made compulsions for many IFAs to find new means of livelihood.

REPLY

Madhusudan Thakkar

In Reply to Roopsingh 6 years ago

The same will happen in life insurance sector too in months and years ahead.September was month of "discontent" Coming months and years will be "DISASTER".

Asit

In Reply to Madhusudan Thakkar 6 years ago

This is result of incompetent insurance advisor.They seen there own profit rather than customer benefit .Most of insurance advisor misguided customer while selling ULIP.

Ranjan D Gupta

6 years ago

This is really a sad incident that inspite good equity market investors are redeeming their portfolios continuously without any reason thereof.I understand if the scheme is not doing well then there is reason to redeem.Redemption is also being done because there is no body to advise them to switch to better schemes available under the same AMC.For example if an investor is dissatisfied with the performance of Reliance Natural Resources Fund.There are very good schemes in Reliance AMC which are Reliance Regular Savings Fund or Reliance Equity Opportunities Fund or Reliance Growth fund.But because of lack of knowledge they are redeeming their holding completely and losing the opportunity of wealth creation.Here there is need for a financial advisor.The Industry, SEBI, and top executives of AMCs must realise it.To build an attitude in investors to pay fees will take another 5-6 years and such a long period will not be comfortable for Mutual Fund Industry to sustain

shankar

6 years ago

IT IS A VERY GOOD NEWS.THE EQUITY MARKET IS COMMING TO AN END IF THIS IS THE CONDITION...NO BODY IS TO BE BLAME...THE ONE AND ONLY PERSON RESPONSIBLE FOR THIS IS MR C.B BHAVE..ASK MR BHAVE TO BRING MONEY IN EQUITY MARKET FROM INVESTORS

shankar

6 years ago

INDIA TODAY DOES NOT MEAN UNITY IN DIVERSITY
TODAY IT MEANS
UNITY IN CORRUPTION

Deepak V

6 years ago

Regarding the Payment of fees by rural Investors initially this will be a problem, but in other Profession they are Paying .
1. To CA , Lawyer, Doctor etc.

But only thing is SEBI is to prescribe the range Example Rs.250/- to Rs.2000/-
extra

REPLY

Debashis Basu

In Reply to Deepak V 6 years ago

People easily pay for
- dealing with a problem/trouble
- gratification/pleasure
You are required by law or circumstances to pay a CA, doctor, lawyer. You dont have a choice.
There is no compulsion to pay for financial services. There is simply no comparison

Roopsingh

In Reply to Debashis Basu 6 years ago

People pay for hardware products easily because it carries intrinsic value like injection or medicine-but investments are mere"HATHELI KA CHAND"-there is no guaranteed product in MF industry-so people never pay fees for such products-people pay for stock trading because they use it as a trading product in which they think they will make regular gains-but MF is a long term product and it is not viable earning for distributors because it has low churning compared to direct security-if Mr Bhave removed entry load due to its churning matter-he should have removed brokerage model from direct stocks long long ago-but he has partial nature and favouratism for MF industry-so he did every kind of harm he could have done-

Madhusudan Thakkar

In Reply to Debashis Basu 6 years ago

Moreover,even after not paying, investors sometime ask for "REBATE".These are push products.PEOPLE" GO" TO CA ,DOCTOR OR LAWYER WHEREAS Distributor "COME" to investor.These products are "sold".If authorities understand this basic reality the solution can be found

Sunil Date

6 years ago

Whilst on the subject of MFs. In all the forums that are attended by Mr Vaidynathan or Mr Bhave of SEBI, why is it that nobody dares to ask them as to how the MF are to be marketed in the rural market ? Are the rural customers going to pay a fee to the transaction agent ( forget a financial planner) ? If the equity market has to grow and so also the MF industry, it cannot be limiting to the urban market.

Deepak V

6 years ago

Investors have become smarter.
1. They are booking Profits or they are coming out & recovering from a loss.
so the question of cut back of incentive given to Mutual Fund Agent to push is not working.

Many Investor of Mutual Fund will enter the Market again as Sensex reaches 22000 - 23000. Then this Complaint of Investor leaving the Market will be a history.

Monday’s Market Preview: Flat-to-positive start indicated

The Indian market is likely to open on a flat-to-positive note, in sync with its Asian peers which are mostly in the green in early trade this morning. However, Wall Street witnessed a flat ending on Friday ahead of the mid-term elections and the Federal Reserve’s “quantitative easing” announcement later this week. The SGX Nifty is up 45 points at 6,085 against its previous close of 6,040 on Friday.

The domestic market is likely to encounter a bit of choppiness in the holiday-shortened week as the Reserve Bank of India (RBI) is set to announce its quarterly policy review tomorrow. While some experts believe that the central bank might go in for a marginal hike in key rates, others opine that the RBI will maintain a status quo on account of rising prices.

Cautiousness ahead of the RBI quarterly monetary review and the outcome of the US Federal Open Market Committee (FOMC) meeting, weighed on investors worldwide. The Indian market, being no exception to the global nervousness, witnessed a high degree of choppiness throughout the week. The market ended with a loss of 1% for the week ended 29th October with the Sensex losing 133.52 points and the Nifty shedding 48.35 points. On a monthly basis, the market tumbled 2% in October with the Sensex declining 412.70 points and the Nifty falling by 125.70 points.

The US markets ended flat with a mixed bias on Friday as investors awaited the outcome of the US mid-term polls and the FOMC meet. Meanwhile, the Commerce Department reported Friday that the economy expanded at a 2% annual rate in the July-September quarter. The 2% rise marked an improvement from the feeble 1.7% growth in the June quarter.

The Dow added by 4.54 points (0.04%) to 11,118. The S&P 500 fell by 0.52 points (0.04%) to 1,183. The Nasdaq was a tad higher by 0.004 points to 2,507.

Markets in Asia were trading with smart gains this morning on upbeat Chinese manufacturing data brushing aside fears about the outcome of the Bank of Japan and the US central bank’s meeting, scheduled this week. The Chinese Purchasing Managers’ Index rose to 54.7, the Federation of Logistics and Purchasing said. The reading was higher than 53.8 for the previous month and in line with analysts’ forecast.

The Shanghai Composite was up 0.99%, the Hang Seng gained 1.65%, the KLSE Composite rose 0.11%, the Straits Times advanced 1.61%, the Seoul Composite was up 1% and the Taiwan Weighted gained 1.29%. On the other hand, the Nikkei 225 was down 0.18% on earnings concerns and a stronger yen. The SGX Nifty is up 45 points at 6,085 against its previous close of 6,040 on Friday.

The RBI should intervene to arrest the sharp appreciation of rupee, which is hurting the country's exports sector, the Associated Chambers of Commerce and Industry (Assocham) has said.

The sharp appreciation of rupee against other currencies is impacting the exports industry, the chamber said. The rupee is now ruling at above Rs44 against dollar, it added.

However, commerce and industry minister Anand Sharma had recently said, “We do not see that we have reached that stage, where the rupee can be termed as volatile.”

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