The mutual fund (MF) industry has adopted a contrarian approach of investment in the volatile equity market during the current month. The fund houses have preferred to invest in the equity markets at lower levels. They were net buyers of Rs 420 crore in the last ten trading sessions in the market when the Bombay Stock Exchange (BSE) Sensex dipped by 3.5%, or 550 points, to 15,000 points between August 1 and 14. MFs were net buyers in three trading sessions out of four when the Sensex dipped. They invested Rs 48 crore on August 6, the day the Sensex slid by 0.31% or 236 points to 14,903 points.
A fund manager from a domestic brokerage said that the fund houses were carefully investing in the market because they were badly hit in the May meltdown last year. Now, they are selling at higher levels and buying at the lower levels of the market, he said. MFs have pumped in Rs 377 crore when the benchmark dipped 2.4%, or 375 points, to end at 14,932 points on August 8. The fund houses were also net buyers at Rs 45 crore on August 9 when the Sensex went southward by 207 points.
MFs were net sellers at Rs 169 crore on only one day along with other market participants when the Sensex shed 1.54%, or 232 points, to close at 14,868 points on August 10. Inflation figures, which went up to 4.45% compared to the market expectation of 4.41% for the week ended on July 27, have prompted nervous selling across the board in the market on that day.