COIMBATORE: With markets remaining patchy due to concerns about poor monsoon and the strength of the global recovery, mutual funds (MFs) are slowly moving to the sell-mode. MFs have net sold equity worth Rs 756.7 crore in this month (up to August 17), data with SEBI shows.

The volatility in markets has hurt performance with returns from diversified equity funds slipping in August. Only 23 out of the 280-odd equity MFs have managed to post gains in the month (till August 18). The gainers too managed to deliver only single digit returns.

“Valuations are a little stretched. QIPs and new issues (IPOs such as NHPC) have taken out some liquidity,” said Sameer Narayan, head, equity , Fortis Investments. “The poor monsoon and the strong rally of the dollar, which made people to move away from risk, have also played a role,” he said. “Markets have given strong returns and so some amount of profit booking is happening now.”
Investor confidence in India has softened in recent days,” according to Moody’s Economy.com economist Sherman Chan.

Investors are worried that poor agricultural performance could derail overall recovery, she said in her latest note on India. Though the concern on monsoon remained, the strong industrial production data has evoked a lot of optimism and it would be too early to conclude a downtrend, Fortis’ Sameer said. MFs turned net buyers of equity in March.

They have continued to invest in stocks after remaining on the sidelines for most of April. While net equity purchases by MFs topped Rs 2291.3 crore in May it came down to Rs 839.3 crore in June but recovered in July when net investments stood at Rs 1825.5 crore.

Fund houses recorded their best performance for the year in May. More than 100 diversified equity schemes registered 30-40 % growth for the month in a strong post-election rally. However, they couldn’t keep up the pace and came up with a tepid performance in June. Only 50 funds registered gains and out of this just two funds managed a growth of above 5% during the month, Value Research data shows. MFs turned in a better show in July buying equity worth Rs 22,559.5 crore, the highest in a month in 2009, SEBI data shows.

TIME FOR CAUTION

MFs have net sold equity worth Rs 756.7 crore in this month (up to August 17), according to SEBI data
The volatility in markets has hurt MFs’ performance with returns from diversified equity funds declining in August. Only 23 out of the 280-odd equity MFs have managed to post gains in the month (till August 18). However, the gainers too managed to deliver only single digit returns.

source: Economic times

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