The mutual fund (MF) industry has preferred to enter at the lower level of the equity market since the beginning of the calendar year. Contrary to this, foreign institutional investors (FIIs) have turned net sellers in the domestic market. The foreign fund inflow is due to several reasons including the sub-prime crisis and domestic uncertainties.
Currently, both institutions are not ready to openly admit the advent of a strong bear market. They have been seen taking a cautious stance and will continue to do so in coming months till clearer trends emerge. However, select funds and institutions are quietly cornering value stocks. “The market gets really attractive at the 15,000-level and this might well be the opportunity to buy more,” said a fund manager. Manufacturing sector stocks with a steady cash flow and multinational FMCG companies have been their target. According to the figures available with Sebi, FIIs were the net sellers at Rs 13,500 crore in equities between January 1 to March 7 2008, or 6.79 % lower than that in the same period in 2007. On the other hand, fund houses have invested at the lower levels of the market. They were the net buyers at Rs 5,021 crore or 12.12% during the corresponding period. However, inspite of the mutual fund houses?s support level, the Bombay Stock Exchange (BSE) Sensex dipped 3,758 points or 18.51% and the National Stock Exchange (NSE) Nifty dipped by 1,223 points or 19.90% during the said period.
A fund manager from a domestic fund house said that the MFs, with a view to shore up net asset values have always stayed away when the markets went down and have bought when the markets corrected, to get better price realisation. FIIs, in turn, have reacted to the sub-prime crisis by booking profits to overcome losses incurred on overseas operations.
