Mutual Funds sitting on Rs 18,227 cr cash pile

NEW DELHI: Mutual Funds are sitting on a huge cash pile of Rs 18,227 crore -- good enough to maintain buying interest and propel stock market forward, analysts say.

"The total cash with MFs, including the cash mobilised through the recently launched New Fund Offers (Rs 62 crore), stands at a healthy Rs 18,289 crore. Flush with cash, MFs are well placed to maintain buying interest and propel the market forward," brokerage firm Sharekhan said.

Besides, an analysis of the buying activity of MFs shows that during March, they invested heavily in the stock market to capitalise on the current low levels of scrips.

Cash levels declined by 8.9 per cent to Rs 18,227 crore in March 2009. Even as a percentage of corpus, the cash levels fell to 16.3 per cent (as compared to 19.1 per cent in February 2009).

"The decline in the cash level on a month-on-month basis indicates the improvement in the buying activity of MFs in order to capitalise on rock-bottom valuations," it said.

Besides, the report noted that the decline in the cash pile of MFs in March was mainly because of the investment by fund managers in the stock market.

In March, equity MFs registered a net inflow of Rs 337 crore, compared with a net outflow of Rs 189 crore in February.

The total assets under management (AUMs) of equity MFs stood at Rs 1,23,618 crore in March 2009, up 6.7 per cent from February 2008, the report said.



As per the SEBI data, mutual funds were net buyers of equities in March 2009, purchasing equities worth Rs 1,500 crore, against net sales of Rs 1,500 crore in the previous month. Also, the net equity purchase in March 2009 was the highest since September 2008 (Rs 2,300 crore net equity purchases).

"Fund flows into the existing schemes improved by 16 per cent whereas NFO collections saw a 30-fold jump," the Sharekhan report said, adding the NFO collections include the amounts raised by IDFC India GDP Growth Fund, DBS Chola Tax Advantage Fund-Series I and Tata Infrastructure Tax Saving Fund.

Besides, Crisil Fundservices in its report had said the mutual funds equity assets recorded a positive growth in March 2009, after declining for two consecutive months. The increase was buoyed by returns from metals stocks (up 24 per cent), oil and gas stocks (up 16 per cent) and automobile stocks (up 14 per cent).

However, despite the rise in returns from equity schemes, the MF industry's overall average AUM shrunk marginally to Rs 4.94 lakh crore in March, from Rs 5.02 lakh crore in February this year.