March 01, 2017

MFs turn net sellers in equities on stock exchanges in Feb after 6 months

A story I did yesterday on mutual funds turning net sellers in Feb after being net buyers for six months:

     Redemption pressure from investors has forced domestic equity
mutual fund schemes to turn net sellers in the equity cash market in
    The collective net sales by funds till Feb 23 was 530 mln rupees. This
comes after six consecutive months of steady net buying by the funds.
    According to a chief executive officer of a domestic fundhouse, investors
were taking money out of equity schemes to deploy it in non-equity tax saving
options before the financial year 2016-17 ends in March.
    Equity mutual fund schemes typically sell in the secondary market when
they encounter more outflows then inflows and have to liquidate holdings to
meet the redemptions.
    The last time when domestic mutual funds were net sellers was in July.
From August to January, mutual funds were net buyers at an average rate of
73.12 bln rupees per month (see table), data from Securities and Exchange
Board of India showed.
    On the other hand, mutual funds' counterparts foreign portfolio investors
have turned net buyers in February recording net purchases of 84.50 bln
rupees through the stock exchanges' cash market segment till Feb 27. From
October onwards, FPIs were net sellers, with monthly average net sales of
89.12 bln rupees till January.
    The largest selling of domestic mutual funds through the stock exchanges
in the last one year took place in March when their net sales were 101.98 bln
rupees, while the highest net buying by them took place in November when
their net purchases were 137.75 bln rupees.

Below is the monthwise net investment activity of domestic mutual funds and
FPIs carried out through transactions on stock exchanges:
           Mutual funds        FPIs
           ------------        ----
                 (in mln rupees)
Feb 2017*        -530         84500
Jan 2017        52340        -13150
Dec 2016        91789        -89600
Nov 2016       137752       -201160
Oct 2016        91285        -52580
Sep 2016        38415         72170
Aug 2016        27169         89060
Jul 2016         -335        120680
Jun 2016         -863         34180
May 2016        71484         20000
Apr 2016        -5757         83470
Mar 2016      -101981        207200
Feb 2016        59460        -60690
Jan 2016        73278       -101810
*till Feb 23 for MFs & Feb 27 for FPIs


Reported by Rajesh Gajra

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