MFs ramp up equity exposure

MFs buys at Rs 1340 cr in September against August purchases of Rs 426 crore.

Mutual funds made net share purchases worth Rs 1340 crore in September compared with Rs 426 crore in August, as per information on the Securities and Exchange Board of India's website.

In debt market, they net bought bonds worth Rs 3,287 crore compared with Rs 4,316 crore in August.

"There have been some inflows in equity schemes, both large-cap and mid-cap funds. Fund houses are slowly deploying the proceeds in the market," a fund distributor said.

In September, Bombay Stock Exchange's Sensex and National Stock Exchange's Nifty rose 5.74 per cent and 4.45 per cent, respectively.

"Apart from inflows into existing schemes, collections in new funds are also being gradually deployed," an official said.

Noting the slowdown in new fund offers, an official said, "Although this month there was only one close-ended equity fund launch, the new funds launched in August are yet to deploy money completely."

Birla Long Term Advantage, a five-year close-ended equity fund, raised Rs 430 crore during August 8-Sep 15. In the previous month, ING Vysya Mutual and Tata Mutual had raised around Rs 500 crore.

In equities, highest net fund buying""amounting to Rs 381 crore""was on September 13, while lowest net purchases worth Rs 6.21 crore was on September 5.

On the debt side, the industry saw a slew of fixed maturity plans. These plans have been popular amid uncertainty about interest rates, as they offer an indicative idea about returns by locking in investments in fixed-tenure bonds,

As per initial collection trend, in September, nine fixed term funds raised Rs 2818 crore.

This excludes collections under four fixed-term plans (two from HDFC Mutual, one each from Reliance Mutual and Pru-ICICI Mutual) and one liquid fund of JM Financial Mutual, which are yet to be finalised. These schemes closed for subscription in the last week of September.

Inflows are being deployed in short-term avenues only as fund managers are still cautious on taking any long-term positions in market amid uncertainty on interest rates.

In debt market, highest net buying amounting to Rs 613 crore was on September 27, while the least net bond purchases were on September 15, when funds bought Rs 1.41 crore of bonds.