Cash call

Mutual fund managers' exuberance towards stocks is seen wearing off, with their cash levels inching up and net investments going down. In October, the cash holdings of equity schemes rose Rs 1,000 crore or 20 basis points of overall equity assets under management (AUM) over the previous month.

Net investments into stocks also dipped to around Rs 3,000 crore in November and Rs 4,500 crore in November, compared to previous three-month average of Rs 8,500 crore. Among the top 10 fund houses, majors ICICI Pru AMC, Franklin Templeton, Kotak MF, Birla Sun Life MF witnessed a rise in their cash holding as a percentage of their equity AUM in October.

HDFC MF and Reliance MF have the least cash in their equity portfolios, at less than two per cent of equity AUM. Equity fund managers say the plan is to increase their cash holding if some of the headwinds, including disappointing corporate earnings, continue.

Also, on the global front, they said, events like the US Federal Reserve increasing rate in December and flaring geopolitical tensions are causes of concern. Fund managers say the industry cash levels could increase to five or six per cent from 4.1 per cent at present. Cash holdings have already increased from this year's low of 2.6 per cent.