After remaining net buyers in the current financial year, the mutual funds (MF) industry has preferred to book profits in July with the equity markets trading at the higher levels.
Sebi data show that MFs have been net sellers in July to the tune of Rs.1,847 crore till date compared to April, May and June when they were net buyers at Rs 1,000 crore, Rs 1,824 crore and Rs 700 crore respectively.
Sanjay Sinha, CIO, SBI Mutual Fund, said that the fund houses may be re-adjusting their portfolio in accordance with the market conditions. However, this re-alignment of the MF’s portfolio does not mean that all of them were selling with an anticipation of a major fall in the markets.
However, another fund manager from a domestic fund house said that MF houses did not want a repeat of May 2006 when a meltdown in the markets seared MFs with more than 30% losses .
Moreover, the MF houses are treading cautiously ahead of the Reserve Bank of India (RBI)?s policy announcement on July 31. The risk of a hike in interest rates still looms large as the inflation figures released for July 14 registered an increase and went up to 4.41% from 4.24% recorded the previous week.
MF houses expresses skepticism in July when the Bombay Stock Exchange (BSE) Sensex crossed 15,000 mark . Since April 1, the Sensex has managed to gain over 3,400 points to touch its all time high of 15,868.85.
In line with Sinha, Tridip Pathak, CIO, Lotus India Mutual Funds, said that some of the mutual fund managers were in a process of changing their portfolio considering the high volatility if some of the stocks.