Mutual funds may continue to see outflow from equity portfolios in the near future as investors book profit and markets await the budget for new directions, industry experts have said.
“There is redemption pressure seen in the equity mutual funds as investors are exiting by booking profit after the rise in benchmark indices like Sensex and Nifty. I think, this trend is likely to continue till the Sensex shows some signs of stabilisation beyond 20,000 mark,” LIC Nomura Mutual Fund Chief Executive Officer Nilesh Sathe told PTI.
The current market is likely to take direction from the upcoming Budget and steps taken to prop up the real economy, he said.
Recent data released for the period ending January, 2013 by the Association of Mutual Fund in India (AMFI) showed outflows of equity funds worth Rs 2,700 crore for the eight months in a row.
“The category assets fell by 0.9 per cent to Rs 1.90 lakh crore led by outflows although the underlying market (represented by S&P CNX Nifty) was up 2.2 per cent for the month (January). Investors continued to book profits on every rise in the market,” a Crisil research note has said.
Another official from a city-based mutual fund house said investors were not likely to enter the market for now, making the inflows into equity mutual fund schemes subdued.
However, UTI Mutual Fund Senior vice-president and head of research Lalit Nambiar said redemption pressure in equity folios would depend on the composition of the portfolios.
“Fund houses with high retail base are not likely to see redemption pressure in the equity space,” Nambiar said.
LIC Nomura’s Sathe said that debt funds would continue to attract fund flows on the back of possibility of further monetary easing by the Reserve Bank of India.
According to AMFI data, income funds saw inflows of Rs 17,300 crore, which took their assets under management to about Rs 4 lakh crore by end of January, the highest month-end assets for the category in the past 32 months.
“Inflows were mainly in ultra-short term debt funds, long term debt funds and dynamic bond funds,” the Crisil research note said.