Fears of redemption by investors amid a continuing global stock market meltdown seems to have forced the mutual funds to make their biggest-ever monthly outflow of close to Rs. 2,000 crore in the month of March.
Most of the fund houses were seen placing sell-orders on the bourses on Monday as the benchmark Sensex settled over 700 points down, traders said here.
According to the latest data available with the market regulator SEBI, mutual funds have been net sellers of shares worth Rs. 1,847.80 crore this month till March 28.
According to the brokers, the fund houses are believed to have sold further from their portfolios in today's trade.
During the month, the fund houses are estimated to have sold total shares worth about Rs. 17,000 crore, while their gross purchase is worth about Rs. 15,000 crore.
"It is a paradox that when markets are at most attractive levels, mutual funds cannot buy due to lack of investors' interest. The sale has been the highest in March as funds are fearing huge redemptions," MF tracking firm Value Research Online CEO Dhirendra Kumar said.
The Sensex plunged by over 6 per cent in March, mostly due to weak global cues.
"The low mobilisation through New Fund Offers (NFOs) can also be seen as an indicator of investor mood. New fund offers have not been able to generate investor response due to the market meltdown," Kumar said.
"Mutual funds have turned net sellers in March as there have been no inflows and the NAVs have taking a beating of 25-30 per cent due to the poor market conditions," Association of Mutual Funds in India (AMFI) Chairman A P Kurien said.