MFs Go Slow On Equity Purchase

Mumbai: With stock markets more or less directionless in recent weeks, mutual fund houses remain to have cash levels of up to 20 per cent of their total corpus. Mutual funds were net sellers in the equity market to the tune of Rs 1,742 crore till March 28 the biggest single month sales since June 2006. The fund houses are, however, purchasing into debt, a move that reflects their heavy cash position. During this month, the fund houses have infused Rs 4,235 crore in debt instruments, their biggest single month investment in debt since November 2006. Since last month, some of the top performing schemes has upped their cash levels to 50 per cent. Incidentally, there is no major new fund offers (NFOs) lined up and the ongoing offers have not got good response as a result. NFOs have extended the issue closure date.
Besides, the worry over issues of hike in crude prices, appreciation of the rupee and high inflation continues. This could prove costly for the fund houses as most diversified equity schemes have good exposure to the information technology sector. The funds were not deploying the cash in purchasing equities as they could be anticipating more correction from the present levels. They are looking forward to infuse into these sectors, a fund manager belonging to a top mutual fund said.