Street Signs: MFs raise equity exposure, Jio effect on benchmarks, and more

Mutual funds raise equity exposure, pull out of debt

Mutual funds (MFs) have invested Rs 14,500 crore in the equity market in the first 23 days of August, indicating a pick-up in net inflows into equity MF schemes. In the first four months of 2023-24, MF investments in equities remained subdued due to profit-booking by investors. On the other hand, they withdrew over Rs 21,000 crore from the debt market during the 23-day period, according to data from the Securities and Exchange Board of India. According to an analysis by CRISIL, the MF sell-off in debt was largely due to net outflows from most debt schemes, with liquid schemes alone experiencing outflows of around Rs 33,000 crore in the first 15 days of August.

Down to the wire for RR Kabel: GMP at 30%

Shares of RR Kabel were trading at a premium of 25–30 per cent in the grey market ahead of its initial public offering, which is set to open on September 13. The price range for the issue is Rs 983–1,035 per share, and grey market operators anticipate the company to list at over Rs 1,300. The company, backed by US-based private equity major TPG, is the country’s fifth-largest manufacturer of wires and cables. Analysts expect the transition to electric vehicles and increased demand for home improvement to act as long-term drivers for the cable industry. RR Kabel’s revenue from operations and profit for 2022-23 stood at around Rs 5,600 crore and Rs 190 crore, respectively. At the upper end of the price range, RR Kabel is valued at Rs 11,676 crore.

The Jio effect on benchmarks

Jio Financial Services (JioFin), the spun-off unit from Reliance Industries, was removed from the S&P BSE Sensex on August 31 and from the National Stock Exchange Nifty almost a week later, on September 6, as both index providers adopted slightly different methodologies. However, the extended stay of JioFin in the Nifty index could be seen as a blessing in disguise for the Nifty, as the stock rallied nearly 10 per cent following its removal from the Sensex. Last week, the Nifty rose 1.98 per cent, outperforming the Sensex, which gained 1.85 per cent. From their respective highs on July 20, the Sensex is currently down 1.5 per cent, and the Nifty is down 0.86 per cent. Both indices are expected to reach new highs this week. The Nifty could achieve it in a session or two before the Sensex.