FIIs, MFs focus on debt, sell stocks

Ditto is the case with domestic mutual funds as well. Mutual funds continued to remain net sellers in equity market at Rs 203 crore, but remained net purchasers in the debt market at Rs 194.43 crore during the same period.

In the current year till October 11, the mutual funds were net sellers of Rs 710 crore in the equity market while they remained net purchasers of Rs 2,770 crore in the debt market. However FIIs investment, till October 13 remained positive at Rs 6,144 crore. “You will not see any erosion in investment in debt instruments. That’s not the case in stocks. In fact, most of the technology stocks had fallen by 25-40 per cent in the last two weeks,” said a broker.

The securities market is expected to stabilise with normalcy returning to the foreign exchange market, lowering of international oil prices. The significant growth of tax collection in the first half of 2000/01 is a positive factor.

MF NAVs also hit: The crash in share prices had also pulled down the net asset values of mutual fund schemes. NAVs of many schemes had fallen by 15-20 per cent in the last two weeks. “The reason is that almost all shares had depreciated. The fall was not restricted to tech stocks alone,” said a fund manager.

The stock fall is expected to dampen mutual fund mobilisation as well. Many MFs which had planned to float new schemes in the last one month have decided to postpone their schemes. The stock fall is another reason for mutual funds to increasingly invest in debt instruments. “At least you will get steady return of 12 to 13 per cent. The capital will be safe,” fund managers said.

Sensex falls 8.64 pc last weeek: It was a week of bloodbath on Indian stock markets. The benchmark Sensex took a massive plunge of 8.64 per cent, or 353 points, to close below the 4,000 level on the Bombay Stock Exchange (BSE) during the bygone week following sustained pounding by investors and funds.

The market faced a bear run with the international rating agency Standard & Poor’s downgrading the rating outlook on India’s long-term, foreign currency credit rating to `stable’ from `positive’ around the midweek. Then came a crash on the Wall Street, leading to a global stocks meltdown. The Dow Jones Industrial Average nose-dived by 379 on Thursday and the the Nasdaq Composite, sliding down since September, fell to its lowest close this year following new Middle East violence that sent international crude oil prices up by as much as 10 per cent.

The rupee also factored as it fell to a new historic low of 46.45 per dollar during the intra-day trade on Thursday. Further, investors were against the new rolling system of settlement to be introduced in the near future as it would increase cost of trading and reduce participation in the market, drastically affecting the liquidity, market sources said.