According to figures released by the Association of Mutual Funds in India (AMFI), investors are flocking to invest in open-ended equity schemes, which has resulted in an increase of over 300% in (gross) inflows in equity schemes to Rs 8.8 bn in December 1999, from Rs 2.0 bn in 1998.

Increased investor participation in equity schemes highlight the fact that investors are no longer wary of equities as they were a couple of years ago. The surge in infotech stocks is backed by fundamentals and not just hype, and discerning investors have realised this. Other sectors like pharma have also seen increased buying interest given India's strong knowledge base.

Mutual funds seemed to be riding this boom and are introducing products focusing on the infotech, e-commerce, internet and other knowledge-driven sectors like bio-technology. The Alliance Sector Series IPO posted inflows of over Rs 6 bn, the Prudential-ICICI Technology Fund clocked over Rs 4 bn in inflows, while the IL&FS E-Commerce Fund registered over Rs 1.5 bn in inflows. Several other MFs have lined up IT-dedicated schemes over the next 2-3 months.

But that is not to say that investors are shunning income (debt) schemes. Open-ended income schemes posted gross inflows of Rs 11.5 bn in December 1999, up 192% from Rs 3.9 bn in January 1999.

Close-ended assured income schemes posted inflows of Rs 6.3 bn in January 1999, which appreciated to Rs 22.1 bn in May 1999, before falling to Rs 670 m in December 1999.

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