Sensex@13K: MFs happy but want more

While for most investors the market touching the 13,000-point milestone was enough to make their day, mutual funds were cautious in welcoming the rise, saying the best was still to come as the rally was limited to large-cap stocks so far.

"It represents the robustness of the Indian growth story, strength of our economy and the prospects for a higher rate of growth," AMFI chairman AP Kurien told PTI after the Bombay Stock Exchange's 30-share benchmark index Sensex scaled the 13,000 level for the first time in its history.

It is a welcome development for the mutual funds, which are active participants in the markets and benefit from the bullish trends on bourses, he added.

However, some market participants were sceptical, saying it was still too early to celebrate in the MF space as the rally has been a narrow one and mainly limited to blue chips.

Mutual Fund tracking firm ValueResearch's CEO Dhirendra Kumar said from New Delhi that MFs might not be the major beneficiaries at the moment as the rally is confined to large-cap stocks. The rally should be reasonably well-spread across all the sectors and segments for the MFs to benefit, he added.

Kumar, however, said that it was a good thing that market has made a quick rebound since the sharp downslide in May to scale this new peak.

Though the sharp upsurge is mainly due to the Sensex and large-cap stocks, other mid-cap and small-cap shares are gradually following but still have not been able to reach the desired levels, Kumar added.

Market analysts said that the coming days should witness significant upsurge in the capital inflows from domestic MFs as well as Foreign Institutional Investors as investors' sentiments have become upbeat with the Sensex breaching the long-awaited 13,000 level.

MFs have been net sellers in equity market so far this month with purchase of shares worth about Rs 6,777 crore (Rs 67.77 billion) and sale of about Rs 7,161 crore (Rs 71.61 billion).

Analysts expect MFs to step up their buying activities in the coming days, enthused by good corporate results coming on the board, as they are said to be sitting on huge cash and stocks are expected to give good returns with an uptrend finding stability on the bourses.

MFs have made net purchase of shares worth over Rs 10,000 crore (Rs 100 billion) in this fiscal year. In contrast, FIIs have purchased shares worth more than Rs 30,000 crore (Rs 300 billion) so far in October. However, FIIs have also sold shares worth more than Rs 25,000 crore (Rs 250 billion), bringing their net inflow to nearly Rs 5,000 crore (Rs 50 billion) in the month.

FIIs have been net buyers in the Indian market since June after pulling out a net of over Rs 8,200 crore (Rs 82 billion) in May when the markets had witnessed a sharp downslide.

The net purchase by FIIs have surged to about Rs 30,000 crore so far this year, while about 150 new FIIs have entered the country taking their total number to 973 as on Friday last week.