MutualFund Highlights

Key Findings: · On account of aggravated liquidity crunch world over and continuous redemption pressure on global hedge funds, FIIs have turned net sellers for the 6th month in a row for Rs. 153.47 bn. October month witnessed highest FIIs outflow in this year and on a cumulative basis since January 2008 FIIs outflow from Indian equity market stood at Rs. 515 bn. (~$12 bn.).· Relentless selling from FIIs and lack of parallel buying from DIIs and retail investors led to an abrupt fall in Sensex and Nifty, which have touched 52 week lows of 7697.39 and 2252.75 respectively. · In the current month till 12th November 2008, FIIs were net buyers to the tune of Rs. 1707 cr. perhaps on account of SEBI and FM's proposed measures to compel FIIs to reverse their overseas lending and borrowing positions and furnish the details on same on a weekly basis.· During October 2008, DIIs were net buyers for a mere Rs. 14.31 bn. as against FIIs selling pressure of Rs. 153.47 bn. On a M-o-M basis magnitude of selling is rising on FIIs part and to counter effect the same DIIs buying magnitude is plummeting owing to reducing cash balances. In current month so far DIIs were net sellers for Rs. 567 cr. · DIIs reported a massive erosion of 18.33% in their AUM size on a M-o-M basis to Rs. 4.31 trln. as compared to Rs. 5.28 trln. · For the month ended October 2008, certain fund houses have not declared their cash and equity exposure in full, the same which has been tabulated by us in this report. · As on 31st October 2008, MFs had Rs. 200.58 bn. In cash which constitutes only about 19.11% of the total equity corpus of Rs. 1.05 trln. In order to inject liquidity and restore confidence in the financial market, global central bankers have taken various coordinated monetary and fiscal measures by announcing series of bail out and stimulus packages and reduction in interest rates. On domestic front RBI and SEBI have taken following soothing measure:-· Cut in CRR and Repo Rate to 5.5% and 7.5% respectively, and reduction in SLR to 24%;· Relaxation by RBI in ECB norms for infrastructure sector;· Easing of creeping acquisition norms by SEBI to enable promoters to increase their stake up to 75% against 55% earlier, without SEBI's prior approval.· Increase in interest rate ceiling by RBI for NRI's rupee deposits to attract more NRI deposits and liquidity.