Large-cap mutual funds see record inflows of Rs 1,287 crore in January amid profit booking

Large-cap mutual funds: Large-cap mutual funds witnessed a surge in investor interest in January, with a remarkable influx of Rs 1,287 crore, marking the highest fund infusion in 19 months. This surge in investment came as investors sought to capitalise on the substantial gains seen in small and mid-cap stocks, prompting them to book profits. This surge in investment follows a net outflow of Rs 281 crore in December, highlighting a notable shift in investor sentiment towards large-cap equities.

The latest data from the Association of Mutual Funds in India (AMFI) revealed that equity mutual funds focused on large-cap stocks received a robust inflow of Rs 1,287 crore in January, representing a significant uptick from the previous month and indicating renewed investor confidence in this segment. This surge in investment pushed the asset base of large-cap equity funds by 26 per cent to Rs 3 lakh crore at the end of January, compared to Rs 2.38 lakh crore a year ago.

Kaustubh Belapurkar, Director - Manager Research at Morningstar Investment Research India, commented on this trend, stating, "Given the significant run-up in small and mid-caps, investors are booking some profits and rebalancing into large-caps." This sentiment was echoed by Akhil Chaturvedi, Chief Business Officer at Motilal Oswal AMC, who noted that large-caps demonstrated positive contributions in January, reversing the net outflows experienced in December 2023.

The broader equity market also witnessed a surge in inflows, with equity schemes attracting a total of Rs 21,780 crore in January, marking the highest monthly infusion in nearly two years. Mid-cap and small-cap focused funds continued to attract investor interest, with inflows of Rs 2,061 crore and Rs 3,257 crore, respectively.

Commenting on the investment trends, Feroze Azeez, Deputy CEO of Anand Rathi Wealth Ltd, highlighted the significant outflow from large-cap funds in FY2024 until December, amounting to approximately Rs 4,949 crore, while small-cap funds saw inflows of Rs 34,103 crore during the same period.

Gopal Kavalireddi, Vice President of Research at FYERS, emphasised the valuation gap between large-cap and mid/small-cap segments, with mid and small-caps trading at premiums of 15 per cent and 20+ per cent respectively. This observation suggests that investors are adjusting their portfolio allocations to capitalise on the relative attractiveness of large-cap stocks.

The rising interest in large-cap funds is also reflected in the growing number of investor folios, with a year-on-year increase of over four lakh folios to 1.33 crore in January.

(With PTI inputs.)