• OUTLOOK ARENA
  • VIEWS ON NEWS
  • OCTOBER 11, 2000

Heavy selling by mutual funds

The gloom pervading the markets has forced many a fund manager to push the ‘Sell’ button in a hurry.

The markets have tanked significantly over the past few days. The BSE Sensex has fallen 5% from 4,159 points in October 4 to 3,947 points in October 10. What is even more disconcerting is that yesterdays 100+ point fall in the Sensex came in the backdrop of an impressive 134% (year on year) growth reported by Infosys, the darling of Indian bourses.

As the selling spree continues and stock prices head southwards, growth fund net asset values (NAVs) are going to take a hit. As more and more software companies look set to declare impressive results, its anybody’s guess where the markets are headed over the following days.

However, one thing seems sure. If investors decide to exit from growth funds in a big way and fund managers are forced to book losses in a falling market, we could witness a situation today, very similar to the one in March, when funds had serious problems meeting redemption requests of over Rs 25 bn.

Investors who have entered growth funds for the long term should be able to take the market slide in stride. However, investors with a shorter investment horizon (of less than 6 months) have some cause for worry.

Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (Research Analyst) bearing Registration No. INH000000537 (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA, Canada or the European Union countries, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

Equitymaster Agora Research Private Limited (Research Analyst)
103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407