Mu. Funds in local stocks Rs. 55,000 crore investment

MUMBAI: Cash holdings with top-20 mutual fund (MF) houses fell to a 10-month low of 5 per cent in March as fund managers opted for equity investments. According to a report, cash capital at the end of February was 6.2 percent, the highest since May 2021.

Equity market valuation now looks more reasonable as compared to March last year. Due to this, funds have reduced cash investment in many schemes.

The MGE Sensex fell to a low of 57,085, while the Nifty slipped below 17,000 in March. Major indices fell sharply after a heavy sell-off as the banking crisis in the US and Europe put pressure on global equities. Unused cash was used as an investment during the market collapse, as valuations became reasonable after the market declined from recent highs.

The valuation increased in October 2021 and reached its long-term average in March 2023. In March, the trailing 12-month N ratio for the Nifty 50 index fell to 21t compared to 32t at the end of September 2021. Fund houses that had double-digit cash capital at the end of February had higher cash usage.

Data from market regulator Sebi shows that during March, fund houses in equity invested Rs. 20,760 crore exposure. During the January-March quarter of FY 2023, mutual funds in local stocks traded Rs. 55,000 crore, which in the October-December quarter of the financial year 2023, he made Rs. 22,700 crore is significantly higher than Rs.

Higher fund inflows through mutual fund schemes were also helped by strong inflows recorded in equity schemes last month. Net investment in active equity schemes rose to Rs. 20,500 crore to a 12-month high, driven largely by both SIP and lumpsum investment. In 2023, mutual funds plan to increase investment in domestic cyclical sectors. The funds have increased their investments in private banks and auto sector stocks by up to 1.5 per cent.