Mutual funds withdraw Rs 2,100 cr from stocks in July

Continuing their selling spree in the stock market, domestic mutual funds have sold shares worth over Rs 2,100 crore in July, making it 13th consecutive month of net outflows.

The funds offloaded shares worth about Rs 2,168.50 crore in the equity market during July, higher than Rs 296 crore outflow witnessed in the month of June, according to the latest data available with market regulator SEBI.

With the latest sale of shares by MFs, the net withdrawal reached to Rs 15,042 crore since the beginning of the year.

In comparison, the foreign institutional investors made a net outflow of more than Rs 6,000 crore from equities in June, almost half from Rs Rs 11,027 crore pulled out in the preceding month.

Also, MF investors pulled out Rs 23,740 crore in debt schemes after investing a staggering Rs 64,602 crore in such schemes in June. Still, the debt market witnessed a net inflow of Rs 2.7 crore in the first seven-months of 2013.

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.

According to market participants, overall, fund houses have been shifting focus from equity to debt scheme because of volatility in the secondary market and latter offers better returns compared to bank fixed deposits.

Another reason for investing in debt scheme could be lower-risk in it than equity funds.

Meanwhile, the BSE’s benchmark Sensex remained flat to close at 19,345.7 points on July 31.

At the end of June, there were a total of 1,184 schemes under mutual funds, of which 749 schemes (66 per cent of the overall schemes) were debt oriented while 346 schemes (29 per cent of total schemes) were equity related.