Equity MFs turn net buyers after 14 months

In August equity fund managers bought shares worth Rs 1,025 crore

For the first time in 14 months India's equity fund managers, have turned net buyers of stocks in August.

 

Amid a highly volatile trading sessions, which saw big hiccups too with benchmark indices losing 700 points in single day, fund managers appear to have used the opportunity to buy falling shares. During last month, BSE's key index Sensex may have lost only 3.76% but there were days when the index witnessed an erosion of nearly 8% in a matter of three weeks.

 

As per the investment statistics available from the Securities and Exchange Board of India (Sebi), equity fund managers bought shares worth Rs 1,025 crore in August. This is the first time of net buying since June, 2012. 

 

When compared to a few immediate previous months, trading in August was far better. In July, fund managers had sold shares worth Rs 2,168 crore. During the previous financial year, the industry had been a net seller and sold shares worth a whopping Rs 22,749 crore - record high in sector's history.

 

According to industry officials, a lot of value buying kicked in throughout the month. Those sectors which have been beaten down severely - mainly the banking shares, infrastructure and metals were the key investments, they said.

 

However, net buying has come at a time when apprehensions of fund redemptions remain. So, at a time when investors continue to exit their investments, where has the money for net buying come from?

 

A chief marketing officer of a large fund house, told Business Standard, "Net buying of Rs 1,000 crore is nothing big for an industry which is sitting on an average cash level of 3-4%. In absolute term, this comes near about Rs 4000 crore to Rs 5000 crore."

 

A chief executive officer (CEO) agrees. "Net buying may not necessarily be linked with fresh money flowing in. Investors may still be redeeming but cash position with fund houses was put in use during the month."

 

As on July, 2012, industry's overall assets under management in equity category stood at Rs 1.63 lakh crore.

Table : Showing net investments by equity fund managers
Month	Net Investments
Jan	-5,212.40
Feb	-847.9
Mar	-1,613.60
Apr	-1,422.90
May	-3,507.90
Jun	-100.6
Jul	-2,168.50
Aug*	1,025.19
*Till 28 August (All figures in Rs crore)
Source : Sebi