Saturday, March 01, 2008

Indian Mutual Funds sitting on close to Rs.16,000 crore of cash !!

Indian equity mutual funds invested close to Rs.10,000 crore in the last three months ended February 2008 and in all have invested close to Rs.17,000 crore during the first eleven months of the current fiscal.

However, during the comparable period (i.e. Apr'07-Feb'08), they raised assets approximating Rs.33,000 crore.

Result - a net inflow of Rs.16,000 crore. This is a large number considering the fact that equity MFs poured in an equivalent sum over a 11 month period. This provides (hopefully, i.e.) for some sort of cushion to the market on the downside given that global markets (especially the US) are still looking extremely nervous.

Notably, while this figure includes MF's secondary market operations in Feb'08 but does not include funds raised during the month of Feb'08 (by way of NFOs or sale of existing schemes). Further, it also does not include redemption numbers for the month of Feb'08.

I don't the redemption numbers are likely to be significantly large even though NFO figures may surprise on the upside. The NFOs for which data is not yet available are: Lotus Agile Fund, AIG Infrastructure & Economic Reform Fund and Reliance Natural Resources Fund.

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