However during all the blood letting on the D-Street, if one particular class of investors has displayed nerves of steel, it is mutual funds.
Mumbai: The stockmarket predicament is so very Dickensian. It’s the best of times because no drastic change has taken place in the country’s macro economic factor to merit such a fall and the current carnage appears more due to technical reasons.
And worst because not only is there no bottom in sight, also missing are the foreign institutional investors who are responsible for the market touching such dizzying heights in relatively such a short while.
However during all the blood letting on the D-Street, if one particular class of investors has displayed nerves of steel, it is mutual funds.
Over the last couple of days, each time the market has fallen, the mutual funds have invested. And just from the cash pile they are sitting on, but also from new inflows.
“Till about two years back, each market fall was followed by pressure on redemptions. It’s not the case any more. The investors are long term and the money is genuine and not leveraged. And they see each fall as an opportunity to increase exposure,” said Ajay Bagga, chief executive officer, Lotus Mutual Fund.
Since the markets peaked on May 10 and then took a free fall, while the foreign institutional investors have net withdrawn over Rs 6,000 crore, the domestic MFs have net invested over Rs 3,000 crore. Market players say since the MFs are sitting on cash, they see the dips as an opportunity to invest at cheaper valuations.
Bagga’s views are supported by J Rajagopalan, managing director of Bluechip Corporate Investment, a leading mutual fund distributor.
Rajagopalan says in spite of the steep correction, there was no panic among his retail investors. “And neither has requests for portfolio churn in favour of debt from equity increased,” he says.
According to the head of equity of a domestic mutual fund, they have not re-rated the market and continue to be bullish on the long term India story. Fund managers say their investment mandate hasn’t changed following the general weakness in the market and they would continue to proportionate funds in the asset class they have raised money for.
However some cases of investors shifting their exposure to more secure debt from riskier equity too has been reported.
Bagga says 6 lakh SIP (systematic investment plan) accounts in the country is testimony to the fact that investors have realised that smart money grows with time, and they are willing to best on the long term.
“Markets like these presents an opportunity to enter and we have seen increased inflows today,” he said.
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