Right time to buy as market at rock bottom, say MFs

The mutual fund industry is certain that the Sensex, which plunged to below 16,000-level today, has hit rock bottom and there is only one way the market would move from here, which is upward.

Post-Budget, the stock prices fell during the first three days, including the Budget day on February 29, before showing signs of recovery on Wednesday. However, panic selling by investors on Friday brought down the prices further on Friday.

With valuations looking attractive and considering that mutual fund houses have lined up Rs 20,000 crore for investment, a positive rally soon is very much a possibility, industry officials say.

"Given the mutual fund industry, which holds assets worth Rs 5.5 lakh crore (nearly 40 per cent in equities), the cash component or the total investable fund would be around Rs 20,000 crore. Hence the only road ahead for the market is the way up," said a fund manager of a reputed mutual fund house.

The move to provide more disposable income in the hands of individuals is also good for the markets, he added.

The Asset Management Companies (AMCs) are of the opinion that the India growth story is definitely on as far as the medium-to-long-term future is concerned. They are particularly bullish on sectors like healthcare, consumer durables, infrastructure and fertilisers.

"The last slump has little to do with the Budget speech. It is largely due to the global market condition, which has been negative during the recent past," said Sanjay Sinha, chief investment officer, SBI Funds Management Private Ltd.

According to him, the Budget has given a boost to consumption in a big way, which should cast a positive spell on the market.

The SBI Mutual Fund is one of the few fund houses whose assets have grown in February by around Rs 2,000 crore.

"The Sixth Pay Commission, coupled with the tax slab reduction, means that there would be a higher disposable income, and the impact of these could be realised from the third quarter of this calendar year," Sinha added.

Currently, the asset under management (AUM) of the company is around Rs 35,000 crore.

Arindam Ghosh, CEO of Mirae Asset Global Investment Management (India) Pvt Ltd, is of the opinion that this fall in Sensex is a perfect buying opportunity as the market has already bottomed.

"The valuations are very attractive as most of the reputed stocks are trading 30 per cent off their peak," he said.

Terming the post-Budget slump as expected, he said that with the Asian markets looking positive, the Indian market should end the financial year 15-20 per cent upside.

Similarly, R K Gupta, CEO of the Taurus AMC Ltd, is of the view that the market should consolidate at the current levels.

"Being the last month of the financial year, profit bookings are on. So, there are some selling going on, but in the larger context it is very unlikely for the market to take further downturn. Therefore, I see it consolidating around the 16,000 mark, which is a good sign," he said.

Gupta also said that the market corrections here were subject to global markets as well.

At present, the investable fund of Taurus AMC is around Rs 400 crore.