Funds houses in the country are lapping up the opportunity presented by the slump in the market and have emerged net buyers in equities for the third month in a row in June, a latest report says.
Mutual Funds continued to be net buyers to the tune of Rs 3,179 crore (Rs 31.79 billion) in the secondary market compared to a net buyer position of Rs 64 crore (Rs 640 million) in May, a study by fund evaluation and risk solutions provider Crisil FundServices stated.
"This is the third month in a row that mutual funds have been net purchasers in secondary equity market signalling that equity fund managers appear to be finding value in stocks that are looking under-priced in the bear phase engulfing the equity markets from the beginning of the year," Crisil FundServices' head Krishnan Sitaram said in the study.
Fund houses have made net equity purchases close to Rs 7,614 crore (Rs 76.14 billion) till June end this year.
Meanwhile, the Assets Under Management in equity mutual funds dropped 24 per cent while the benchmark index S&P CNX Nifty fell as much as 34 per cent in the first six months of the year.
However, the fact that the AUM of the equity funds has been falling lesser than the benchmark indices is a sign of increasing maturity of investors.
"Investors now seem to be looking to buy at lower levels. Also systematic investment plans have gained popularity which means inflows into funds to some extent are insulated from market movements, the study said.
Thus while the declining AUMs is a reflection of the markets declining, retail investors with a reasonably long term investment horizon seem to be continuing to be loyal to equity funds as one of the avenues to get inflation beating returns," the study further said.
