Segment-wise Net Investment by FPIs ( ` bn)
Net Investment by FPIs
FY12 FY13 FY14 FY15 FY16
Source: BSE, NSE, Dun & Bradstreet Research
FPI Net Investment
Source: SEBI, Dun & Bradstreet Research
V. Mutual Funds The mutual fund industry is one the fastest growing and most competitive segments of the Indian securities market. It plays a vital role in channelizing household savings in the capital market. During FY16, the regulatory reforms undertaken by SEBI with respect to mutual funds include the introduction of mandatory stress testing of liquid fund and money market mutual fund (MMMF) schemes, modification of product labelling in mutual funds, relaxation of restrictions on managing/ advising of offshore pooled funds by domestic fund managers, tightening of exposure limits on investments by mutual funds, and enhancement of scheme-related disclosures. Mutual funds invest Rs 661.4 bn in equity markets in FY16 Mutual funds play an important role in channelizing household savings in capital markets. In FY16, mutual funds recorded a net investment of Rs 661.4 bn in the equity markets. This was 62.4% higher than a year ago, when mutual funds made a net purchase of Rs 407.2 bn in the equity markets. This was the second year in a row where mutual funds had recorded a net purchase in the equity markets, after five years of net selling. In contrast, however, mutual funds’ net purchases in debt declined from Rs 5,870.2 bn in FY15 to Rs 3,762.9 bn in FY16, reflecting a sharp 35.9% decline. With debt accounting for around 85-90% of the aggregate net investment of mutual funds in the stock exchanges, this resulted in a decline in the combined net investments as well. Accordingly, the quantum of combined net investment by mutual funds in both equity and debt taken together reflected a decline in FY16. In FY16, mutual funds executed net purchases/sales (equity + debt) to the tune of Rs 4,424.4 bn, as against Rs 6,277.4 bn executed a year ago. This translates into a 29.5% decline as compared to the preceding year.
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