Cash and debt funds gain as investors redirect profits from gold rally
A new report says money market funds attracted Rs 1.4 lakh crore in July as inflows into precious metals declined sharply
Gold prices rose by more than 9 per cent this month, delivering nearly five times the returns generated by the broader equity market, but investors largely redirected their gains towards cash and fixed-income instruments rather than increasing their exposure to precious metals, according to a report by Vallum Capital.
Inflows into precious metal funds fell from Rs 8,680 crore in June to Rs 4,084 crore in July. Money market funds, meanwhile, attracted Rs 1,40,390 crore after recording outflows of Rs 65,530 crore in the previous month.
The report attributed the immediate rise in gold prices to weaker-than-expected US employment data, which briefly eased concerns about another interest rate increase by the Federal Reserve.
Fixed-income investments also witnessed a turnaround. The segment moved from outflows of Rs 53,006 crore in June to inflows of Rs 5,947 crore in July, representing a month-on-month swing of Rs 58,954 crore.
Among domestic sectors, automobiles and transport performed strongly as passenger vehicle sales in India crossed the four-lakh mark in July for the first time.
Technology stocks also recovered as global investors shifted some capital from South Korean semiconductor companies to Indian software firms. Despite the improvement in performance, technology-focused funds recorded outflows of Rs 1,345 crore.
Healthcare funds attracted Rs 737 crore in fresh investments as the sector extended its year-to-date gains to more than 16.4 per cent.
Public-sector banks advanced over 3.8 per cent, supported by strong quarterly earnings, while shares of private banks declined by around 4 per cent, widening the performance gap between the two segments.
Micro-cap funds emerged as the strongest performers, returning 4.6 per cent during the month, 15.9 per cent so far this year and 12.7 per cent over the past 12 months. Small-cap funds gained 2.8 per cent in July, with year-to-date and one-year returns of 11.4 per cent and 13.3 per cent, respectively.
Large-cap funds remained down 3.9 per cent for the year but attracted Rs 14,977 crore in July, an increase of Rs 5,291 crore over the previous month, the report said.
With IANS inputs