MFs press sell button as markets rally

Offload stocks worth Rs 3,735 crore in March; FY14 selling crosses Rs 20,000 crore

Fund managers have continued with their selling spree in the face of redemption pressure even as the stock indices climbed to record levels. In March, when the BSE Sensex rallied six per cent, equity funds sold shares worth Rs 3,735 crore, the highest since October last year.

The sell-off was seen throughout 2013-14, barring August, taking the tally of total selling for the financial year to Rs 20,900, the second highest in the history of the country’s mutual fund industry.

“Selling was predominantly on the back of huge redemption pressure in the month of March, especially investors who didn’t make money despite being invested for five years used the opportunity to book profits,” said Jaideep Bhattacharya, chief executive officer of Baroda Pioneer Mutual Fund.

 

Added Siddhartha Singh, CEO, Pinebridge Investments, “There were high redemptions last month. Investors used the relief rally to make money.”

The redemption figures for March will are yet to be released by industry body Association of Mutual Funds in India (Amfi). However, going by the selling data, there could be outflows in the equity segment for the first time after four months of net inflows.

During October, as fund managers sold Rs 4,017.8 crore worth of shares, outflows from equity schemes stood high at Rs 3,542 crore. Akshay Gupta, CEO, Peerless Mutual Fund, said the profit-booking could continue in April as well.

"Investors will definitely book profits. I do not think anyone will take a huge position as the country nears elections. Investors will take advantage of the pre-poll rally seen in the market," he said.

Given that most equity schemes were fully invested in the market, fund managers could have taken a tactical call to book profits to meet investors' demand, said experts. "There has been sectoral selling — for instance, in infrastructure and metals, which have not been doing well for long. Further, fund managers also started shifting from private to state-owned banks," said Gupta.