Funds have pulled out Rs 535 crore from the equity market during November 3-12. This is as against net outflows of Rs 1,028 crore since January 1, 2003, according to data available with Securities and Exchange Board of India (Sebi).
In fact, during the two-and-half month period since September 1, the net outflows of mutual funds from equities has been a whopping Rs 1,020.24 crore.
Mutual fund investors have been booking profits at higher levels to recover their past losses in equities. Faced with redemption pressures, funds are forced to sell their holdings, said Value Research head Dhirendra Kumar.
According to Mr Kumar, Mutual funds have also been actively realigning and churning their portfolio and thus the cash-holdings of these funds has also increased.
He added that profit-booking may not only be due to dividend declaration as the quantum of dividend declared has not increased so sharply even though the frequency of such declarations has increased in the past few months.
Interestingly, while mutual funds have been pulling out from the bourses, foreign institutional investors (FIIs) have pumped in about Rs 1,950 crore into equities during the month till November 11.
Mutual funds have been net sellers during five of the eight months in the fiscal 2004 so far, even as the FIIs have pumped in about Rs 23,300 crore into the Indian markets so far.
During the fiscal so far, the net sales of mutual funds figure at Rs 842.36 crore. However, the figure is much lower than the amount of net outflow in the previous three fiscals. Funds were net sellers to the tune of Rs 2,067 crore, Rs 3,796 crore and Rs 2,767 crore during fiscals 2003, 2002 and 2001, respectively.
The first eight days in November account for Rs 535.29 crore, which is the highest during any month in fiscal 2004 so far.
Besides, November, mutual funds had pulled out Rs 195 crore, Rs 290 crore, Rs 196 crore and Rs 177 crore during the months of October, September, June and April, respectively.
In August, the mutual funds had made the highest net investments of Rs 403.38 crore during the fiscal so far. Besides, funds remained net buyers during May and July to the extent of Rs 76 crore and Rs 71 crore, respectively.