Similar circumstances exist now as they did in FY22 and FY23, when FIIs sold for net proceeds of Rs 1.3 lakh crore and Rs 44,000 crore, respectively.
According to industry players, mutual fund houses have a war chest of Rs 2 lakh crore to sustain the market during a period when foreign institutional investors (FIIs) are selling in large quantities.
This comprises new inflows and open-ended plans totaling Rs 1.25 lakh crore. Additionally, if the markets continue to decline, another sizeable tranche of balanced advantage funds (BAF) and multi-asset funds (MAF) worth between Rs 60,000 crore and Rs 80,000 crore would be lying on the sidelines.
According to the CEO of a fund company, “these funds may get good opportunities in the fall because they increase allocation to equities when markets fall and valuations become cheap.”
At the moment, these schemes have Rs 3 lakh crore in total assets under management (AUM). The CEO went on to say that these schemes will need to raise the equity share from 50% to 80% on average if the market declines.
Mutual funds held Rs 1.8 lakh crore in cash at the end of September. However, mutual funds made significant investments to stop the decline in October as FIIs increased their selling. FIIs sold Rs 79,693 crore in net sales thus far. DIIs, including mutual funds, had contributed Rs 97,091 crore at the same period.
The majority think that in recent years, both high-net-worth individuals and regular investors have been very intelligent. They have not hesitated to book profits, but they have also kept up their SIPs and made consistent market investments.
According to industry experts, more than 80% of DII’s assets come from mutual funds. Players like banks, insurance corporations, and pension funds are among the others.
