Mutual funds on a roll, corner Rs 2885 cr equity

The Indian mutual fund industry has, for first time ever, turned a net investor on the bourses on a cumulative basis. The industry has posted a cumulative net buying of Rs 2,885 crore as on October 3, 2005.

Ever since the Securities and Exchange Board of India (Sebi) directed the mutual funds to reveal their markets buying in 2000, they have never been net buyers on the stock markets on a cumulative basis, till September 15, 2005.

Going by the Association of Mutual Funds in India data, mutual funds have bought shares worth Rs 1,58,564 crore and sold shares worth Rs 1,55,679 crore between January 2000 and October 3, 2005, to emerge net buyers.

The mutual fund industry has achieved this distinction on the back of a huge net buying of Rs 11,313 crore on the bourses during the calendar year 2005 thus far.

In the current calendar year, mutual funds have bought shares worth Rs 55,091 crore and sold shares worth Rs 43,778 crore.

The industry's aggressive buying in the Indian equity markets led to the all-time high mobilisation of funds through new equity-oriented growth schemes floated during the calendar year.

This year, mutual funds mobilised Rs 18,649 crore - the highest ever inflow from them and 2.4 times higher than the Rs 7,800 crore mobilised earlier in as many as five years (between 2000 and 2004).

Flush with liquidity generated through equity-oriented schemes, mutual funds have aggressively churned their equity portfolios in 2005.

They have clocked an aggregate turnover of Rs 98,868 crore in 2005 so far, with shares worth Rs 55,091 crore being bought and shares worth Rs 43,778 crore sold.

With Rs 11,313 crore invested so far, and considering an outflow of Rs 3,933 crore from the redemption of old equity schemes, the Indian mutual funds are still left with liquidity worth Rs 4,000 crore.