Equity mutual funds into value buying mode: CRISIL

MUMBAI: Indian mutual funds adhered to the basic investment principle of ���buying at low levels��� in September. They were net buyers of equity taking advantage of the market slump due to discouraging news from global markets. Mutual funds found value in equities by buying to the extent of Rs.22.92 billion in September ��� the third highest in the year after January (Rs.77 billion) and June (Rs.31.79 billion), reveals A CRISIL reports.

Said Krishnan Sitaraman, head-CRISIL Fund Services, ���despite bearish equity markets, mutual funds��� equity investments increased as there have been incremental flows into equity in the year primarily on account of the support provided by systematic investment plans.���

On an overall basis, mutual funds also remained net buyers of equity from January ��� September, to the extent of Rs.127.12 billion. Mutual funds were net buyers of debt to the extent of Rs.64.16 billion compared to Rs.74.64 billion in August 2008.

���A predominant portion of the fixed income portfolio of the mutual fund industry is still invested in high quality assets and there is no need to panic on this front. Moreover, the recent reduction in the CRR and the repo facility extended to banks to meet the liquidity requirements of mutual funds are expected to improve the situation going forward,��� added Krishnan.

On the other hand, a volatile and cascading market saw only Arbitrage Funds posting positive returns in the equity oriented category during September. HDFC Arbitrage Fund, JM Arbitrage Advantage Fund and Kotak Equity Arbitrage Fund were the top performers with almost 1 per cent monthly returns.