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The country’s equity fund managers have been busy selling their holdings bigtime this month. With stock indices playing around their earlier peak levels, retail investors accessing stock markets through mutual funds are redeeming fast, say industry executives.
So far in the current month, fund managers have turned net sellers yet again in a market marked by high volatility. Already, shares worth Rs 3,097 crore have been squared off, almost three times the average of the last three months. In April, net selling stood at around Rs 1,423 crore. If the trend continues for the next couple of sessions, which fund managers do not rule out, industry would end up witnessing the highest net selling in recent months.
“There are redemptions this month,” says Karan Datta, national sales head of Axis Mutual Fund. “Whenever stock indices near their earlier highs, redemptions are bound to happen,” he adds.
Levels of 20,000 on Sensex and 6,000 on Nifty have psychological impact on investors’ mindset. “And, the fact that in the last few months, markets have been playing to-and-fro with such levels, investors tend to believe it’s better to book profits and re-enter at lower levels,” explains an industry insider.
According to Waqar Naqvi, chief executive officer of Taurus Mutual Fund, “All those investors, stuck at these levels earlier, are the first to exit. Markets are so choppy and volatile that investors do not want to take risk.”
In terms of flows, the fund market’s equity segment has seen some stability over the past few months. Even net selling by fund managers was reasonably comfortable. However, this time around it appears the sectors equity segment is heading for one of the highest net outflows in recent months.
“Apart from profit booking by investors another likely reason could be shifting of funds to Offer for Sale (OFS) issuances this month,” says the chief investment officer of a mid-sized fund house. So far this month, 12 OFS have hit the market and five more are lined up for the next few days. April had witnessed net outflow of Rs 270 crore from equities; in March, inflows were positive at Rs 768 crore.
Currently, the sector offers 348 equity-related products, of which 299 are pure diversified equity schemes and the remaining equity-linked saving schemes. As on April 30, the assets under management (AUM) of the equity category stood at Rs 1.78 lakh core - which is 21.6 per cent of the industry’s overall AUM of Rs 8.25 lakh crore.
