Now MFs press sell button

NEW DELHI: In a role reversal from the trend witnessed last month, now it seems to be the turn of mutual funds to go on a selling spree while foreign institutional investors have been net buyers so far in June.

Domestic MFs have sold shares worth more than Rs 2,000 crore so far this month, while they have been net sellers in three out of the past four trading sessions.

According to the data available with Securities and Exchange Board of India, MFs have sold shares worth a net of Rs 659 crore between June 1-6, while FIIs have been net buyers of shares worth more than Rs 1,000 crore in the same period.

FIIs sold shares worth a net of Rs 8,247.20 crore in May, which is their biggest ever one-month net sales till now.

In contrast, MFs purchased shares worth more than a net of Rs 7,500 crore last month, the largest ever net purchase by them in a single month.

MFs had adopted an active buying position in the market on the backdrop of a sharp downslide earlier last month, which was in part driven by huge FII outflows.

However, the continuing weakness on the bourses is likely to have started worrying the fund houses and investors alike, who were planning to enter the market at lower levels.

Meanwhile, a number of equity research firms and market a nalysts have warned over the past few days that the three-year bull run has finally come to an end and a full-fledged bear market has already begun.

The benchmark Sensex has also broken below the psychological support level of 10,000-point mark, after holding above this level for more than three months.The 30-share barometer index lost another 201 points today to close at 9,756.76 points.

The market sources said that the domestic MFs took the market fall initially as a buying opportunity, but the continuing downward momentum on the bourses is likely to have acted as a dampener in their buying spree.

The trend reversal comes on the back of reports that mutual funds are facing heavy redemption pressure, as the investors are rushing in to withdraw their money.

The recent downslide in the stock market has led to a sharp plunge in the NAVs of equity funds as well, which is compounding the concerns of investors who were looking for some big returns till just a month ago, the market observers said.

One of the leading MF house today came out with an advertisement in leading newspapers while asking the investors to stay calm and invested.

However, most of the leading market players have denied any redemption pressure for now.

According to market sources, Reliance MF purchased shares worth a net of Rs 1,000 crore last month and it was maintaining a strong cash position across all its schemes.

The company is estimated to have witnessed net inflows over the past 15 days and is denying any redemption pressure as of now.