If anyone is cheerful about Friday?s 541 points Sensex crash, it is the Indian mutual fund (MF) manager. They are in an upbeat mood as they feel that now is the time to deploy the cash which they were sitting on. In July till date, MFs have been sitting on a huge amount of idle cash. Industry sources say that fund managers may be sitting on close to Rs 7,000 crore. They also say that since the market run-up in June, fund managers have been sitting on the sidelines and waiting for the right moment to build their portfolio and deploy the cash they were sitting on.
The recently concluded Reliance Equity Advantage new fund offering (NFO) collected Rs 2,700 crore and Franklin Templeton High Growth Companies NFO collected around Rs 1,515 crore. The total NFO collection during last month in June through various schemes was to the tune of Rs 2,665 crore.
Sanjay Sinha, CIO, SBI MF, said, ?The markets have been quite volatile for the last few months and fund managers were sitting on the sidelines with a lot of cash. They will be taking advantage of this market crash and will deploy the cash they have been holding on to.? He also said that fund managers were worried for some time now with the markets at such high levels.
Even debt fund managers are waiting for the next week?s RBI Annual Policy review as they feel that there might be some negative triggers that might pull the market down further.
Ritesh Jain, Head Fixed Income, Kotak MF said that the cash which MFs are sitting on is transitory in nature. This means that a large part of the money which is lying in cash funds is not business-generated money, rather banking system cash surplus which will move out at the first signs of a cash crunch.
He said, ?It is a good time for the fund managers as now its time to deploy the cash that MFs were sitting on. But this cash is transitory in nature. We can expect more volatility in the next week as well, as there might be a possibility of a negative trigger from the credit policy next week.?
Sameer Kamdar, country head (MF) Mata Securities said, ?The Securities and Exchange Board of India (Sebi) regulations allow MFs to hold on to the money garnered through NFOs for a 6-month window. Fund managers were waiting for the right time and good valuation to deploy this amount. They might now deploy a part of that amount and wait for the market to shape up after the Reserve Bank of India?s (RBI) first quarter review of the credit policy next week.?