MFs trade cautiously in falling markets

In June’08, markets remained completely under bear grip. The Sensex and Nifty have lost over 17% each. Foreign institutional investors were net sellers to the tune of Rs 10,577.80 crore in the equities, at same time domestic mutual funds remained net buyer of Rs 2,896.40 crore.

This was the second highest buying by MFs in the year 2008. In the month on January, they bought equities of Rs 5,567.60 crore.

With markets falling, mutual funds have been net buyers in the month of June except for five trading sessions. However the inflow is not so substantial as compared to FII's outflow. Currently, Indian Mutual Fund's industry size is Rs 5.5 lakh crore.

In last six-month Sensex and Nifty have lost 34%, where MFs remained net seller only in March ’08. For same period, FIIs have been net sellers to the tune of Rs 26,198 crore. However, Mutual Funds have been net buyers to the tune of Rs 7323 crore. Mutual Funds are slowly & steadily putting money in the market.

One can expect to have more inflows from Mutual Funds if markets fall further.