Mutual Funds Surge to Record Rs 4 Trillion Equity Buying in 2024

Mutual funds (MFs) have achieved a major milestone in 2024, with their equity buying more than doubling to over Rs 4 trillion, marking the first time this figure has been surpassed. 

This sharp surge follows two consecutive years of over Rs 1.5 trillion in equity deployment, underlining the growing power of domestic institutional investors in the equity market.

MFs Dominate Equity Market in 2024

In 2024, MFs emerged as the largest institutional buyers in the equity market for the second time in three years, following a similar dominance in 2022. While MFs were slightly behind foreign institutional investors (FIIs) in 2023, their return to the top in 2024 highlights their increasing influence on the market.

The surge in equity buying by MFs has been driven by a combination of record inflows into equity and hybrid MF schemes, coupled with consistent growth in systematic investment plan (SIP) contributions. These steady SIP inflows have significantly boosted the buying power of MFs, making them a key player in the market.

Impressive Inflows and Market Support

As of November 2024, active equity schemes had attracted Rs 0.5 trillion from investors, a robust performance compared to Rs 1.6 trillion in inflows throughout 2023. The rising equity buying capacity of MFs has provided crucial support to the market, especially during times when FIIs have been net sellers.

Domestic institutional investors (DIIs), including MFs, played a pivotal role in supporting the secondary equity market, while foreign portfolio investors (FPIs) turned marginally net buyers. Mirae Asset Mutual Fund’s report noted that monthly SIP flows continued to see strong growth, surpassing Rs 25,000 crore in October 2024. Remarkably, MFs accounted for approximately 80% of net flows from DIIs in 2024, further cementing their dominance.

Record Primary Issuances and Future Outlook

The surge in MF inflows has also enabled the market to absorb a record volume of fresh equity issuances in 2024, totaling Rs 3.4 trillion. With a strong pipeline of upcoming IPOs, the momentum is expected to continue into 2025, with MFs poised to maintain their key role in the market.

The explosive growth of MF equity buying in 2024 signals a robust outlook for India's equity markets, bolstered by the continued strength of SIP inflows and MFs' dominant position as institutional buyers. As the market absorbs record IPOs and navigates shifting investor dynamics, MFs are expected to remain central to sustaining growth in the coming years.