Indian stock markets may have surpassed psychological barriers this year but country's equity fund managers seem to have no option but remain net sellers at a time when sentiments are buoyant.
National Stock Exchange (NSE)'s CNX Nifty crossed 6,000 mark or for that matter BSE's benchmark index Sensex is comfortably trading above 20,000 mark; but story in the equity mutual fund space continues to remain same.
According to the statistics available from the markets regulator Securities and Exchange Board of India (Sebi), till 17 January mutual funds sold equities worth Rs 1,949 crore. And since 8 more trading sessions are yet to go this month, the month is likely to end up seeing fund managers selling almost the same amount as was witnessed in the last couple of months if pace of redemption requests continue the way the first half of the month saw.
| Month | Equities Sold (In Rs crore) |
| September | 3,198.7 |
| October | 2,519.8 |
| November | 2,397.8 |
| December | 2,698.9 |
| January | 1,949 |
Industry experts say that it is not that they are not investing."Since, we and I believe our competitors are not sitting on huge cash level; so in case of redemption requests we are bound to sell to honour investors' decision," says chief investment officer of a large-sized fund house.
According to industry experts level of indices has a sentimental impact on investors. They tend to redeem at every highs. "These are mainly those investors which have been stuck long. And I understand the trend will continue to till markets surpass their previous peaks," explains chief executive officer of a mid-sized fund house.
So far this month, barring one trading session on 10 January, all other days fund managers remained net-seller in the market.
Last month, net selling of shares had hit second highest for the year 2012 at around Rs 2,700 crore amid high redemption pressure. This resulted into closure of a massive 6 lakh equity folios, never seen in industry's history.
Though heavy redemption during market rally has become more or less a trend in domestic fund industry. But, last month also had brought some relief for the sector as fresh sales in the equity segment had shown 9-month high of over Rs 4,000 crore. This was an indication of the fact that at a time when existing investors are booking profits, fresh money is also finding its way into equity schemes.
As on 31 December, assets under management (AUM) in the equity category (including ELSS) stood at Rs 1.91 lakh crore. Out of industry's total AUM of Rs 7.6 lakh crore, equity-related schemes constituted over 25%.