Mutual Funds turn aggressive buyers in March

Huge inflows into New Fund Offers (NFO) are forcing domestic mutual funds to buy aggressively in the equity markets even when the indices are at record highs. After reporting net sales for the last 3 months, mutual funds have made net purchases of Rs2,062 crore so far in March 2006 according to the latest data from SEBI.

Domestic funds had made net sales of Rs1,377 crore, Rs1,172 crore and Rs246 crore for the months of December 2005, January 2006 and February 2006 respectively.

Trading activity of mutual funds has also increased considerably, which indicates more portfolio churning. Gross purchases till 16 March have already crossed Rs8,000 crore as against a full month average of around Rs9,000 crore for the previous 3 months. Gross sales for the first half of the month has crossed Rs6,000 crore against full month average of around Rs10,000 crore for the last three months.

For the period April 1, 2005 to March 16, 2006, domestic mutual funds have made net purchases of Rs11,888 crore.

FII's have made net purchases of Rs3,871 crore or $873 million so far this month in the equity market. Total net inflows from FII's so far this calendar year is at Rs15,137 crore or $3.37 billion.