MFs sit on huge cash pile

Banking & Finance

MUMBAI: Mutual funds (MFs) are sitting on a huge cash pile of Rs 22,908 crore, which is well placed to maintain buying interest and propel the sagging market forward, a report said.

"The total cash with MFs, including cash mobilised through the recently launched NFOs to the tune of Rs 6,266 crore, stands at a healthy Rs 22,908 crore. Flush with cash, MFs are well placed to maintain buying interest and propel the market forward," Ms Mallika Baheti, Research Analyst, Sharekhan said in a research report here.

The absolute cash levels for all existing equity funds rose by 17.4 per cent to Rs 16,642 crore in February 2008 from Rs 14,176 crore in January 2008. Even the cash as a percentage of the total corpus increased to 8.7 per cent in January 2008 from 7.6 pe r cent in December 2007.

Rising cash levels indicate the cautious outlook of fund managers in the wake of concerns of a global slowdown and consequent dip in foreign inflows into emerging markets such as India, Ms Baheti said.

The cash level for all funds more than three months old also showed a similar trend, rising to 8.2 per cent of the total corpus in February 2008 (from 7.6 per cent of the total corpus in December 2007).

This once again reflects the cautious stance adopted by MFs. The equity fund flow analysis showed that after witnessing record inflows in January, net inflows into equity MFs more than halved to Rs 6,903 crore in February as compared to Rs 14,070 crore r ecorded in January. - PTI