Equity mutual funds in India suffered an outflow for the second straight month as investors continue to sell in a market that has erased bulk of the virus-induced losses despite the record contraction in economic growth.

Stock plans lost almost ₹4,000 crore ($541 million) in August, adding to withdrawals of ₹2,480 crore seen in July, according to data from the Association of Mutual Funds in India. Fixed income, liquid and money-market plans also witnessed outflows last month.

“A combination of profit-booking and the need for cash flow in the current economic environment are the key triggers for the outflows,” said Vidya Bala, head of research and co-founder at Chennai-based Primeinvestor.in.

Markets are also moving further from key economic metrics and fundamentals — even considering the next fiscal — necessitating taking profits off the table.

Pandemic shock

Flows into equity plans have been shrinking for months as savers hold off from adding to investments amid worries about the rapidly spreading epidemic that brought Asia’s third-largest economy to a halt in the June quarter. But India’s $2-trillion stock market is up more than 45 per cent from its March lows, thanks to the four straight months of purchases by overseas funds and the growing interest of first-time investors.

Hybrid funds, which invest in stocks and bonds, saw outflows of ₹4,820 crore , while money-market and liquid funds combined saw withdrawals of ₹7,900 crore, the data show.