 "Mutual Funds equity schemes recoup losses as market rebounds")
Equity schemes have made a strong comeback after Budget day.
In line with the gains in key indices, which rose nearly seven per cent in three days, the highest such in seven years, the category average return of equity funds in the period was six to seven per cent.
The top invested schemes, which collectively manage a little over a fourth of all equity assets, did well. The recent rally arrested the continuous fall, which had deepened since the start of 2016, in the wealth of investors who'd invested in these. A majority of these schemes had lost 15-20 per cent in recent months.
However, this week saw some relief for equity schemes. HDFC Equity Fund and HDFC Top 200, the largest in the sector and with renowned fund manager Prashant Jain at the helm, had a gain in excess of eight per cent. Collectively, they managed assets worth Rs 29,300 crore as on end-December 2015.
Fund managers have doubts over the rally's sustainability and don't rule out more bouts of correction. However, they also feel the market is near its bottom.
“It’s not a time to be complacent; it’s too short a rally to rejoice about. There could be pain for a quarter or two before we see clear signs of revival,” says the chief investment officer (CIO) of a fund house, who wished not to be named.
Sunil Singhania, in its outlook for equity in 2016, said: “While the economy has faced multiple challenges and headwinds, there have been more structural positives that India had (over the past one year). As soon as financial stability returns in the global markets, the balance of scale, heavily tilted in favour of positives, will come to work and lend stability and positivity to Indian equities.”
On Budget Day, stocks had one of the wildest swings. At one point, the 30-share Sensex index lost a little over 700 points, to later recover. Fund managers used this opportunity to buy Rs 1,000 crore in stocks and the investment call paid them well.
Amid a nervous market before the Budget, the Sensex had slipped below 23,000 and the Nifty was struggling under 7,000. In the initial weeks of February, fund managers took a cautious stand on the market and put in only Rs 2,000 crore in the first fortnight. They stepped up buying in the second half and bought additional stocks worth Rs 4,000 crore.
Budget 2016-17 was largely given a thumbs-up by them. Navneet Munot, CIO of SBI MF, said: “While adhering to fiscal discipline, the Budget has provided necessary growth impetus by spending more on infrastructure, which will have a multiplier impact on the economy. We also expect an inter-meeting rate cut by the Reserve Bank, to provide a further boost. We expect a feel-good environment to get created after this Budget, amid a challenging global environment.”
Thus far, in this financial year (ending March 31), fund managers have bought stocks worth Rs 76,000 crore, highest in the sector’s history. Amid continued robust inflows from domestic investors and healthy monthly flows through systematic investment plans of Rs 3,000 crore, fund managers have enough cash in hand to deploy in equities. Over the past 22 months, their investments (net of redemption) in stocks has crossed Rs 1.2 lakh crore.
