| Swimming against the tide, mutual funds were very bullish on the debt markets in March. According to data posted on the Securities and Exchange Board of India (Sebi) website, mutual funds put in almost 10 times more money in the debt market than in equity in March. |
| Mutual funds' gross purchases in debt were Rs 6,288.70 crore and gross sales were Rs 4,380.81 crore in March. In comparison, they made gross purchases of Rs 3,879.92 crore of equity while sales where Rs 3,712.05 crore during the month. |
| The increased inflow into debt securities indicates that funds continue to remain not very bullish on equity in the near future. Moreover, perhaps shaken by the volatility in the equity markets, investors still prefer debt to equity funds. |
| The trend continued in the first week of the new financial year as well. While the net investment of mutual funds in the debt market was Rs 684.66 crore, according to Sebi data, mutual funds were net sellers in the equity markets to the tune of Rs 313.82 crore. Till April 7, the gross purchase by funds of equity was Rs 818.99 crore; gross sales stood at Rs 1,132.81 crore. During this period, funds' gross purchases in debt stood at Rs 1,628.85 crore and gross sales stood at Rs 944.19 crore. |
| Incidentally, the investment by mutual funds in the debt market has increased manifold in the last four years, with their net purchase soaring to Rs 22,700.75 crore in 2003-2004, up from a relatively modest Rs 5,023.49 crore in 2000-2001. |
| Even in 2003-2004, when the equity markets reported a huge 100 per cent-plus rally, the mutual fund investment in the debt market was Rs 22,700 crore, compared with only Rs 1,307.91 crore in equity. However, 2003-2004 was the only year when mutual funds were net buyers of equity in the past four years. |
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