Domestic mutual funds and foreign institutional investors are known for their contrary views on the Indian equity market. Over the last five years, FIIs have been found buying in December, while MFs turned net sellers. But this December has been different to date, with both being net buyers.
Even though their exposure has been low, FIIs have bought equities worth Rs 906.5 crore. The figure pales in comparison with the money they poured in over the last five years, barring an exception in December 2006, when FIIs sold equities worth Rs 3,667.3 crore.
The contribution by MFs to the equity market in December 2007 is just Rs 396.9 crore.
In December 2006, MFs bought equities worth Rs1,627.06 crore. Deven Choksey, MD, KR Choksey Securities, a Mumbai based stock broking firm says, ?FIIs in December are in a holiday mood and would like to stay away until the holiday season comes to an end. So, we see instances when they are net sellers and take home their year-end profit. As far as mutual funds are concerned, at present they are sitting on huge cash and they take this opportunity to churn their assets under management (AUM). However, over the last five years, MFs have significantly increased their AUM, and this has increased their strength, which allows them the option of taking a view contrary to FIIs?.?
In December 2006, FIIs sold equities worth Rs 3,667.3 crore, but MFs were net buyers at Rs 1,627.06 crore. In December 2005, FIIs bought equities worth Rs 9,335 crore and MFs were net sellers at around Rs 1,376.73 crore. This disparity was also visible in December 2004 when FIIs had poured in Rs 6,683.6 crore and MFs sold equities worth Rs 355.83 crore.
Overall, FII inflow in equities in 2007 has increased 82.85% to Rs 66,813.60 crore compared with last year?s Rs 36,539.70 crore.