Even as Indian markets slipped by 8%, domestic mutual funds turned net buyers in August 2011, making their highest net investments in over three years
The month of August 2011 was a nightmare for the Indian equity markets following weak global cues led by a series of weak economic data from the US and the swelling credit crisis within the Euro-zone. Moreover, the moderating domestic economic data and the deceleration of the corporate earnings also put pressure on the domestic markets.
However, the domestic mutual funds switched into buyers, making their biggest net investment in over three years. As on August 2011, mutual funds bought equities worth Rs. 2,524 crore following their earlier biggest monthly net investment of Rs. 3,179 crore as on June 2008.
According to Morningstar, the large cap and the mid/small cap fund category declined 7.8% and 7.6% respectively during August whereas the Sensex, BSE MidCap and BSE SmallCap indices have declined 8.4%, 9.3% and 14.1%, respectively. In addition, while 25% of the mid and small cap equity funds have underperformed their category benchmark CNX Midcap index 38% of large cap funds underperformed the category benchmark BSE 100 index during August.
