MFs Liquidated Stocks Worth Rs 700 Between Jan - May '07

Mumbai: Domestic mutual funds have continued sellers in the five months to May, quite unlike foreign institutional investors (FIIs), which have been big purchasers. While mutual funds liquidated stocks worth Rs 700 crore between January and May this year, FIIs have remained to shop for Indian equities, the tab at Rs 17,267 crore, a 73 per cent increase over the amount they invested in the same period last year. Mutual funds seemed to be quite optimistic on the market last year, putting in Rs 13,811 crore in the first five months.
DSP Merrill Lynch says that it appears that cash levels are up because funds have been apprehensive of a correction in the market for some time. Moreover, several funds now prefer to buy futures because that market is fairly liquid. Besides, the market has become increasingly stock specific and so rather than being fully infused, funds are trying to pick the right stocks. Interestingly, FII inflows into the Indian market which now has a market capitalisation of Rs 1 trillionare strong despite the fact that Asian funds have been pulling out money from India.

Around 26 per cent of the regional funds have a 10 per cent plus country weight for India, compared with 19 per cent a year back. The inflows into India can be sourced to a host of India dedicated funds and some global funds. Apart from some India funds unveiled in the US, money has come in from several funds in West Asia. Besides, a few global funds have increased their allocations to India.