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Continuing their selling spree in the stock market, domestic mutual funds have offloaded shares worth more than Rs 4,000 crore in October amid profit-booking.
The funds sold shares worth a net Rs 4,018 crore in the equity market during October, while they had pulled out a net Rs 2,800 crore in the preceding month, according to latest data available with market regulator SEBI.
However, equity MFs were net buyers in the equity market in August and bought stocks worth Rs 1,600 crore.
With the latest outflow, mutual funds’ net withdrawal from the stock market has reached more than Rs 9,200 crore since the beginning of the year (January-October).
In comparison, foreign institutional investors made a net inflow of more than Rs 15,000 crore during October.
Mutual fund is an investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets.
“The equity category had seen some kind of inflows in August on the back of value buying, although the inflow amount was too small,” Axis MF MD and CEO Chandresh Nigam said.
“However, the recent positive news flows both on the domestic and global front helped to improve sentiments in the market and has led to sharp rise in the 30-share sensitive index, Sensex.
On account of this, some existing investors have booked profit,” he added.
On the other hand, mutual fund investors invested a staggering Rs 37,171 crore in debt schemes in October.
With the equity market remaining volatile in 2013, domestic funds have increased their focus on the debt market to benefit from higher interest rates and have invested Rs 3.5 lakh crore in the debt market in the first ten months of the year.
Market participants believe that fund houses have been shifting focus from equity to debt scheme because of volatility in the secondary market and since the latter offers better returns compared to bank fixed deposits.
Another reason for investing in debt schemes could be the lower risk in it than in equity funds.
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