Despite 26% rally in Nifty, MFs sold equities worth Rs 9,600 crore in April-July

Despite the Indian equities market registering a strong comeback since March lows, mutual fund houses have been on a selling spree in 2020, reported Business Standard.

According to the report, fund managers were net sellers in all months in 2020, except May, selling shares worth Rs 9,639 crore.

April saw the most profit-taking as mutual funds sold equities worth Rs 7,965 crore at a time when the market bounced back 14.68 percent month-on-month. They bought shares worth Rs 6,522 crore in May and turned sellers once again in June and July, selling shares worth Rs 8,196 crore.

Since touching multi-year lows in March, the markets made a stellar comeback rising nearly 45 percent till date. Ample liquidity due to stimulus packages, lifting of nationwide lockdown and a record number of retail investors backed the immense rally, but the overhang in the name of COVID-19 still remains a concern with cases crossing 17 lakh in India.

Nonetheless, the stellar rally has roused concerns over market valuations as the D-Street may be discounting a future without COVID, but experts feel, in hindsight, the party could turn out to be premature.

The Street is now looking at the upcoming Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) meeting scheduled for August 4-6.

In the March meeting, the committee had slashed policy repo rate by 75 basis points, bringing it down to 4.4 percent from the earlier 5.15 percent. So far in 2020, the central bank has slashed policy rates by 115 bps.

An SBI research report- Ecowrap stated that the policy rates may remain unchanged and the MPC may look for "unconventional policy measures" to ensure financial stability.

"We believe an August rate cut is unlikely. We believe that the MPC could now well debate what further unconventional policy measures could be resorted to in the current circumstances to ensure financial stability is continued to be addressed."