MF cash pile reduces to Rs 15,000 cr in May

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New Delhi: Mutual funds saw their cash pile declining by 25 per cent to Rs 15,000 crore at May-end, with the firming stock market providing them an opportunity to invest the money they were holding for several months.

"Fund houses felt they can participate in the rally as the market was heading towards the support zone of 15K level.

MFs entered the market believing that the fundamentals are good," Taurus Mutual Fund Managing Director R K Gupta said.

According to the Mutual Fund Monthly Performance Report by Reliance Money, the fund houses were sitting on a cash pile of Rs 15,074.27 crore at May-end against that of Rs 20,108.92 crore at the end of previous month.

Fund managers said that availability of stocks at cheap valuations renewed their interest in the secondary market.

Analysts feel by June-end, the cash levels of the fund houses would increase as they would now again hold back their investment plans to cash-in on the correction that is expected to come in the market post the Budget on July 6.

"July will be a period of consolidation. This month there would be some profit booking and the cash position would increase. Fund managers would adopt a wait and watch policy before deploying cash in future," Gupta added.