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

February.

    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

End

Reported by Rajesh Gajra

http://www.cogencis.com/differentiators/ShareNews.aspx?newsId=863885