MFs contribution to turnover rises to 6%, FIIs declines to 9%

Mumbai, April 20 | Updated: Apr 21 2005, 05:53am hrs
The volatility in the equity markets in April has changed the trading pattern of institutions. The contribution of foreign institutional investors (FIIs) to the total turnover declined from 18% to 9%, while mutual funds (MFs) turnover rose from 4% to 6%.

The data on the website of the capital market regulator Securities and Exchange Board of India (Sebi) show that between March 31 and April 18, the combined turnover on The Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE) fell from Rs 7,956 crore to Rs 5,575 crore. The turnover slipped to a low of Rs 4,610 crore within the period.

The FII contribution was steadily slided during this period.

The share of FIIs, which was nearly 19% on March 31, dipped to 10% on April 5. The trend continues till date with FIIs contributing only 11% to the total turnover on April 19.

Paras Adenwala, a market analyst said: FIIs have been reducing their exposure across all emerging markets due to the rise in US interest rates, which has led to a decline in FII activity on the domestic bourses. On the other hand, because of a number of new equity-dedicated schemes, the contribution of domestic MFs has been on the rise. Although the contribution of MFs decreased to 2% on a single trading session on April 13, it has been on a steady rise ever since.

The last available data show that MFs are now contributing a little over 6% to the current turnover.

Rusabh Seth, head of equities at Kotak MF, said, There is a lot of money in the MF industry, with equity schemes becoming more popular with the salaried class. The rising number of systematic investment plans (SIPs) bears witness to this. The money coming in is also invested regularly.

Mr Seth added, The industry has witnessed good money coming in the IPOs of the equity schemes and this money is beginning to be deployed in the markets at a steady pace.