The bear phase in the stock market has come as a boon for mutual fund (MF) managers, who are taking this opportunity to increase their exposure in the equity markets.
Data provided by the Securities and Exchange Board of India (Sebi) shows that on July 27 (Friday), when the Sensex tanked 542 points, mutual funds were net buyers to the tune of Rs 251.60 crore. Since then, MFs have been consistently increasing their exposure. The buying momentum continued when the markets opened the following week as MFs were again buyers to the tune of Rs 523.10 crore on July 30 (Monday), and Rs 186.30 crore on July 31 (Tuesday). However, MF were net sellers to the tune of Rs 900.60 crore in the month of July.
Prateek Agrawal, VP and head equities of ABN AMRO Asset Management Company (AMC), said, ?The fall in the domestic equity market as a result of developments related to sub-prime mortgage in the US economy was being keenly observed by Indian fund managers. While everyone else was rejoicing the rise in the equity markets, fund mangers were waiting on the sidelines and sitting on a lot of cash. They went shopping in the later part of July when the equity markets started dipping. This was despite the fact that MFs have been net sellers and booked profits in July.? Sanjay Sinha, CIO of SBI AMC, said, ?As a result of fluctuation in the markets, fund managers have been playing the waiting game. As the equity markets are on going through a lot of volatility, it?s now time to start deploying the cash they have been sitting on.?
Industry estimates suggest that fund managers are sitting on cash worth Rs 7,000 cr. The amount garnered through new fund offerings during June and July are waiting to be deployed in the market. For example, the NFO collection of Reliance Equity Advantage scheme of over Rs 2,700 cr and Franklin Templeton?s High Growth Companies scheme of Rs 1,515 cr are waiting on the sidelines to be deployed in the market.