MFs are laughing all the way to the bank - Views on News from Equitymaster

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MFs are laughing all the way to the bank

Feb 16, 2000

Mutual funds seemed to have caught the drift early on and booked profits while the stock markets were in a frenzy last week. The subsequent correction in the markets has justified this decision. According to figures available with the Securities and Exchange Board of India (SEBI), the last seven trading days witnessed sales of Rs 6.7 bn by MFs. Unlike others who were buying, MFs sold heavily to book profits at higher levels. The sell-off could also have come as a nervous reaction to SEBI's decision to impose margins on institutional outstanding positions.

In any case, MFs won't be complaining, for the time being at least. The sell-off will lift their net asset values (NAVs) in a big way, but will also leave them with a lot of cash. With the correction in stock prices, MFs will now be eyeing some stocks that look cheap at current prices.

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