Mutual funds on stock selling spree since Aug

Tags: News
Mutual funds sold stocks worth Rs 11,349.60 crore in the past six months amid continued redemption pr­essure, but poured Rs 2,96,225.80 crore into debt since August.

Domestic fund houses have been net sellers in the equity market all through since September. Last these funds bought stocks was in August, when they ended the month as net buyers of stocks worth Rs 1,607 crore, Sebi data showed.

Since September, the funds have withdrawn Rs 11,349.60 crore from stocks. They have remained net sellers this month too, offloading stocks worth Rs 1,122.50 crore so far. There has not been a single month since September when there was net inflow of MF money into equities.

The biggest outflow from equities in the last six months was in October, when fund houses pulled out Rs 4,017.80 crore.

But they have invested Rs 34,352.60 crore in debt funds during the same period. The biggest inflow to debt was in January when Rs 45,415 crore investor money flowed into the bond funds.

Sameer Hassija, senior investment analyst at MorningStar India, said volatile markets, uncertain interest rate scenario and the rupee depreciation were the key triggers determining investment flow through 2013.

“Though mutual funds have witnessed a surge in inflows, only debt funds have managed to gain, while equity funds have continued to see outflows. Equity fund investors have been redeeming at higher levels of the market, thereby signaling their lack of confidence on the market’s ability to sustain at these levels,” he said

The number of retail folios in equity-oriented schemes has also gone down, indicating a decline in interest among investors in these funds, Hassija pointed out.

Ritesh Jain, chief investment officer of Tata Asset Management, said: “Overall the mutual fund industry saw a drop in equity folios as volatility increased in stocks and investors saw opportunities in debt to earn higher returns and shifted there.”

On the MF investors’ affinity towards debt, Jain said with yields rising to peak levels across terms, investors were keen to seek income opportunities on the debt side. “Increased volatility in the equity market also triggered the tilt in asset allocation towards debt, leading to more inflows to debt funds,” he said.

Different varieties of debt funds have been witnessing continuous inflow for some time now, said Hassija. “Within these categories, the lower-duration funds have been seeing more traction, thanks to lesser interest rate volatility. Although medium- to longer-duration funds have managed to hold investor’s fancy, a volatile interest rate scenario may keep investors at bay,” he said.

Post new comment

E-mail ID will not be published
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.

EDITORIAL OF THE DAY

  • Signalling good times, current account deficit is likely to grow from here on

    The current account deficit (CAD) numbers for April-June quarter declined sharply to 1.7 per cent of GDP.

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

Chander Mohan Sethi

CMD, Reckitt Benckiser India

COLUMNIST

Arun Nigavekar

Disruptive innovation in education

The past two weeks had a fair share of interesting ...

Rajgopal Nidamboor

Regain the spirit of focused power

For aeons, the human race has been experimenting with a ...

Gautam Gupta

Manufacturing must keep workers’ welfare in mind

It may be early days yet, but the labour reforms ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture