Calcutta, April 2: For the third year in succession, mutual funds have dumped equity shares and bought fixed income securities. In 2002-03, they sold equity shares worth Rs 2,066.70 crore and invested Rs 12,604.42 crore in debt instruments.
There was a quantum jump in investment in fixed income securities in 2001-02 as interest rates fell sharply triggering a rally in the debt market. Investment in debt instruments in 2001-02 grew over 100 per cent compared with the previous year.
But in 2002-03, despite a relatively flat market, there was a 15 per cent rise in investment in fixed income instruments.
The sale of equity shares, on the other hand, has been declining in volume. In 2001-02, mutual funds were sellers in equity to the tune of Rs 3,795.88 crore. Compared with 2001-02, the sale in 2002-03 was over 45 per cent lower.
Sales peaked in January this year when mutual funds sold shares worth Rs 403.04 crore, but over the last two months, they have been buying, albeit in small volumes. They invested Rs 93.24 crore in equity shares since January.
Industry observers say a significant volume of sale in equity shares could be attributed to Unit Trust of India, and more precisely to its schemes that are being closed. But there is no denying that given the uncertainty in the equity market, investors prefer debt funds to equity-oriented schemes.
The industry thrives on corporate funds, mostly parked for a short length of time.