MFs favour equity funds to debt: Crisil

Mumbai, Feb 25 | Updated: Feb 26 2005, 06:20am hrs
Mutual funds are shifting their focus to float equity oriented funds from debt-based funds as the stock market remains buoyant. With the active equity market, there has been a clear shift toward equity oriented mutual funds from the debt-based instruments, Crisil executive director and chief rating officer Roopa Kudva said here on Friday.

Kudva, speaking on the sidelines of a seminar organised by Indian merchants chamber, said debt based instruments was the favourites of mutual fund houses as the interest rates were coming down in the last two years.

But the scene is now changing with interest rates going up. Now mutual funds are shifting to equity based fund to capitalise the prevailing situation, she said.

She said that there is boom in equity market essentially driven by the strong fundamentals and companies making good profits.

Moreover, foreign institution investors are also pumping in more funds into India. As the buoyancy in the equity market is expected to continue, mutual funds will opt equity funds route, Kudva added.

PNB AMC Pvt Ltd deputy chief investment officer Binay Chandgothia said the interest rates is expected to remain stable in next fiscal. There are no indications for change in interest rates. A stable rate regime is expected, he said.

Reliance mutual funds chief investment officer K Rajagopal added that interest rate would remain stable as they are linked with inflation, liquidity and credit growth.