Mutual funds (MFs) are net buyers in the equity markets at lower levels while foreign institutional investors (FIIs) are net sellers. FIIs sold equities worth Rs 27,525 crore, and MFs bought shares to the tune of Rs 8,980 crore between January 1 and June 26 this year.
A senior fund manager at a domestic fund house said that the oil prices have led to the rise in inflation that sent jitters down the spine of the bouses. The resultant inflation, inter alia, has led to nervousness in the market that witnessed FIIs downloading their stakes.
?Mutual funds have entered at a ower level of the equities to sell it in the upside of the market in future,? he said.
The slide in equities was restricted to 32%, on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), because they received buying support from mutual funds, say analysts. BSE?s 30-share Sensex was trading above 20,000 points on January 1, but selling pressures descended on it when FIIs started selling following following the sub-prime mortgage crisis and the rising crude prices later.
The Sensex shed 6,474 points during this period, and NSE?s 50-share Nifty dipped 2,002 points. Both indices pared 32% each.
Amol Agarwal, an economist at IDBI Gilt, said that the rising demand in the global market is responsible for the steep increase in the oil prices even as politicians in the US held speculators responsible.
?The demand has increased faster than the supply and this has led to increase in the oil prices?, he said.