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Last Updated : Jul 08, 2019 06:29 PM IST | Source:

MFs go on shopping spree after sharp fall in equity market

Fund houses are expecting the market to hover around same levels for some more time.

Himadri Buch @himadribuch
Image: Pixabay
Image: Pixabay
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Mutual funds went ahead and added more to their cart after the stock market took a tumble of over 2 percent on July 8.

"Mutual funds were buying shares of PSBs, electronics and construction stocks," said an institutional broker.

Another broker said that fund houses were buying shares of SBI, Voltas and Avenue Supermarts.

However, he said, mutual funds were not buying large quantity of shares. "They (MFs) were not buying aggressively in the market as they are skeptical of the market movement," the broker said.

Fund houses are expecting the market to hover around same levels for some more time.

"Increase in public shareholding for companies have led to a fall in the market. We expect the market to remain around the current levels until the clarity on public shareholding is clarified,"  a fund manager from a bank-sponsored fund house said on condition of anonymity.

"The government has not clarified in the budget that in how much time the companies will have to bring down the promoter shareholding," he added.

The market is caught in a bear trap after Budget 2019 proposed to increase surcharge on super-rich people and raise minimum public shareholding to 35 percent from 25 percent earlier.

The BSE Sensex fell 792.82 points or 2.01 percent to 38,720.57 and the Nifty50 plunged 247.20 points or 2.09 percent to 11,564. About three shares declined for every share rising on the BSE.

The average market capitalisation of the BSE-listed companies fell from Rs 153.58 lakh crore recorded on 4th July to Rs 148.08 lakh crore witnessed on July 8, which translates into a fall of over Rs 5 lakh crore. 

At a recent panel discussion after the budget organized by National Stock Exchange,  Anoop Bhaskar, Head of Equities, IDFC Asset Management, ‘’India does not require a stimulus package, as GDP growth rate at 7 percent is one of the fastest in the world and India has been growing at this rate for past few years. India needs timely execution of various projects which will reenergise the growth”

 Ratnesh Kumar, MD & CEO, BOB Capital Market, said wider public ownership would help in further fomenting transparency, liquidity and corporate governance within India Inc.

The proposal to consider raising the current public shareholding threshold to 35 percent from existing 25 percent will help ease promoter stakes and help larger segment of the investors to be a part of India growth story.

First Published on Jul 8, 2019 06:11 pm
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