Mutual funds (MFs) ended with net purchases of Indian stocks for the second consecutive day on Thursday, after remaining net sellers for five straight days ending Sept. 12. The combined net purchase of Indian equities by MFs was about Rs 401 crore (Rs 256 crore on Thursday and Rs 145 crore on Wednesday).
The two days of share purchases exceeding sales resulted in MFs narrow their net sale position, coinciding with a volatile trend during the week that saw a roller-coaster ride for the BSE Sensex.
In September (till 15), MFs bought shares worth Rs 12,103 crore, but disposed off stocks worth Rs 12,540 crore, resulting in a net sale position of Rs 436 crore.
In contrast, foreign institutional investors (FIIs) were net sellers of Indian equities worth Rs 473 crore on Thursday, though they bought stocks worth Rs 660.59 crore on a net basis on Friday, the day the BSE Sensex closed 186 points higher at 28,599.
The secondary market is also getting touch competition from the primary market with a slew of initial public offerings (IPOs), besides debt instruments. While L&T Technology Services and GNA Axles saw oversubscription of 2.54 times and 54 times, respectively, India Inc. is also wooing investors with fixed income return options such as non-convertible debentures (NCDs).
Two recent companies that offered steady return instruments were Indiabulls Housing Finance and Dewan Housing Finance (DHFL).
Between June and Sept. 15, firms have raised about Rs 18,350 crore via the NCD route, according to IPO tracker Prime Database.
"The NCD market is doing well as the equity market is doing very well and people are booking profits and exiting," Ajay Manglunia, executive vice-president and head fixed income at Edelweiss Securities, told the Financial Chronicle.
"They want to keep this money in NCDs that ensure the safety of their capital and are also offering 9-10 per cent returns. Most of the NCDs that have been announced are from good companies with a strong business model," he added.