While the brokers are busy rigging the stocks up and down, mutual fund (MF) investors are laughing all the way to bank with their investments finally showing some signs of revival. No, they are not in a hurry to redeem their investments. If the figures are anything to go by, MFs are not wasting any time to miss the party.After remaining net sellers in equities for more than a year, MFs have turned net buyers in May. MFs have invested a combined Rs 2,783 crore in equity and sold shares worth Rs 2,674 crore, which gives a net investment of Rs 110 crore during the almost one-and-half month period ended June 10. This compares with a net outflow of Rs 177 crore in April.Considering that the MFs were crumbling under huge redemptions and falling equity prices last year, fund managers are only hoping that the present trend continues for long enough to wipe away the frightening memories. MFs were net sellers to the tune of Rs 2,066 crore in fiscal 2003. They had pulled out Rs 3,795 crore from equity markets in fiscal 2002 and Rs 2,766 crore in 2001.The reversal of trend was also attributed to the strong inflows. “With the banking regulator taking fancy for soft interest rate, people are no more interested in keeping their money in fixed deposits. Investors want more value for their savings. Since they are wary of venturing into stock markets directly, they have opted for MFs. The recent inflows into mutual funds is a proof for the change in investor attitude,” said a fund manager with a leading mutual fund.Equity schemes of local MFs, including UTI Mutual Fund, have added a net inflow of Rs 550 crore to the total corpus of equity funds in the first two months of the current fiscal (April-May 2003), wiping away redemptions to the tune of close to Rs 1,000 crore they witnessed between November 2002 and March 2003.The broad-based rally witnessed even beyond the stocks which constitute benchmark indices has also added to investors confidence and turned in favour of MFs. “Volalitity in banking and power stocks apart, the stellar performance by oil and gas refinery stocks as well as specific stocks in the manufacturing and engineering stocks have added to the investors confidence,” said stock broker R.A. Podar.As per figures provided by Association of Mutual Funds in India, a close scrutiny of the equity funds between November 2002 and May 2003 indicates that while equity schemes panning across all local funds faced redemptions to the tune of Rs 979 crore between November and March 2003, they have added Rs 548 crore between April and May 2003.“However, the overall upgradation of the banking sector thereafter did a lot of good to equity funds in particular. Also the fact that broad-based indices like the BSE 200, BSE 500 and BSE PSU index outperformed the BSE Sensex is proof to the fact that investors may be convinced about the fundamentals of most companies that do not find a place among bluechips. In fact it would be no exaggeration to say that most of these by way of their fundamentals evoke comparison to bluechips,” said a fund manager.The disappointing results posted by many IT (information technology) companies had a telling effect on the IT index. However, corporates from sectors like auto, banking, steel, textiles, engineering and pharma have made good of IT sector’s absence. The attractive payouts announced by these companies have added value to the mutual fund investment in these companies. Also dividend is now tax-free in the hands of investors. All these confidence-building developments have attracted large and small investors to equity markets.
