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MFs equity exposure down by 10 percent in Oct

By SiliconIndia   |   Monday, November 29, 2010
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Bangalore: Mutual funds' equity exposure to derivatives, power, telecom and consumer non-durables came down in October when compared with September as these domestic institutions' equity play in 32 out of 40 sectors came down, data with Sebi shows. According to the Kumar Shankar Roy , the overall equity exposure by mutual funds stood at Rs 226,000 crore at the end of September, which came down by almost 10 per cent to Rs 203,000 crore at the end of October. Mutual funds were net sellers to the tune of Rs 5,800 crore in October, extending the 5-month streak of being net sellers in equities. After having nearly Rs 11,000 crore in derivatives at the end of September, MFs seem to have cut positions drastically in October. Derivatives exposure by MFs stood at Rs 1,753 crore at the end of October, a decline of over Rs 9,200 crore in assets, which in percentage terms stands at 84 percent. In August, Sebi had instructed that MFs total exposure in option trade must not exceed 20 per cent of the net assets of the scheme apart from disclosing their exposure in derivates in a uniform format in half-yearly portfolio disclosure reports. In the power sector, MFs exposure came down from Rs 12,500 crore at the end of September to nearly Rs 10,500 by October end a drop of 16 percent. The BSE Power index fell around 4 percent in the same period. The telecom space, which is battling with falling revenues from users and spectrum controversies, continued to be on the red list of MFs. From an exposure of Rs 5,883 crore at the end of September, MFs play in telecom services space stood at Rs 4,650 crore a drop of 21 percent. In the consumer non-durables space, which is among the top 10 sectors in terms of MF equity exposure, fund houses appeared to hold negative views on the sector. The exposure fell from nearly Rs 13,800 crore to about Rs 12,700 crore, recording a decline of 8 per cent in assets. According to Yogesh Radke, analyst, Edelweiss, large-cap funds reduced exposure in banking, IT, telecom, engineering, metals and FMCG. Mid-cap funds cut play in banking, engineering, auto, IT, telecom and oil & gas, while diversified funds reduced exposure to oil & gas, IT, telecom, metals and FMCG. Sectors such as engineering (Rs 152 crore), pharmaceuticals (Rs 116 crore), software (Rs 103 crore), textile products (Rs 60 crore) and paper (Rs 42 crore) saw modest rise in MF exposure. As per Edelweiss, equity AUM at Rs 2.2 lakh crore accounted for over 34 percent of the total MF industry. AUM of equity schemes slipped Rs 1,700 crore (down 0.8 percent) in October over September.
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