MFs' net selling of equities dips to 15-month low

Weakening redemption pressure gives a break to fund managers in June; fund houses sell equities worth Rs 100 crore

It's a much-needed break time for India's equity fund managers when it comes to liquidating their holdings to meet redemption requests.

For investment managers, June was a month to rest as their net selling of shares declined a whopping 97 per cent, compared with the previous month.

Fund managers sold equities worth Rs 100.6 crore during the month - the lowest for over 15 months - according to the data by the Securities and Exchange Board of India (Sebi). In May, fund managers' net selling of shares was worth Rs 3,508 crore.

"There have been flows in equity segment last month. Fresh money from new investors too has come," said Deepak Chatterjee, managing director and CEO of SBI Mutual Fund.

Although the Association of Mutual Funds in India (Amfi) would release the monthly statistics next week, industry executives said that redemptions were less.

Jaideep Bhattacharya, CEO of Baroda Pioneer Mutual Fund, said, "Last month was better than the first two months of the (June) quarter, though it is not drastically better. Redemption pressure in equities have come down."

It is a clear respite for the industry, which had witnessed the largest net selling of equities in the previous financial year at a whopping Rs 22,749 crore as investors kept on booking profits and exited investments.

According to marketing head of a large fund house, the last month brought in good inflows in equities. "It is a positive development as we had been facing terrible times for several months now."

Sector insiders told Business Standard that movement in Indian stock markets, which had been crashing continuously for few trading sessions along with the world markets upon Ben Bernanke's statements on liquidity tightening, provided opportunity to investors to get in the markets.

BSE's benchmark index Sensex had lost 1,300 points or 6.5 per cent, at one point of time in June in a matter of 16 trading sessions before bouncing back in the last few days of the month.

"I assume these investors have strong hands with reasonable risk appetite and continue with their current investments," said national sales head of a top private bank sponsored AMC.

It has been proving difficult for mutual fund sector to keep their equity investors stay invested at a time when markets failed to deliver returns for years now. The first two months of the current financial year witnessed net outflows of about Rs 3,600 crore while monthly sales of equity schemes remained poor at around Rs 3,000 crore.