Mutual funds withdraw Rs 13,721 cr from stocks so far in 2013

Domestic mutual funds (MFs) for the third month in a row offloaded shares in November, selling equities worth Rs 482 crore in the month, to take total outflows from equities to Rs 13,721 crore in 2013 so far.

Funds sold shares throughout 2013, barring May and August. They offloaded shares worth Rs 4,018 crore in October and Rs 2,801 crore in September.

Mutual fund is an investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets.

Debt MFs were net buyers in the debt market in November and bought debts schemes to the tune of Rs 41,623 crore.

With equity market remaining volatile in 2013, domestic funds have increased their focus on debt market to benefit from higher interest rates and have invested Rs 4.3 lakh crore in the debt market in the first 11 months of the year.

The market participants believe that fund houses have been shifting focus from equity to debt scheme because of volatility in the secondary market and better returns by the latter as compared to bank fixed deposits.

Another reason for investing in debt schemes could be lower risk compared to equity funds.

According to data available with market regulator Sebi, net inflows by foreign institutional investors (FIIs) were more than Rs 8,000 crore into stocks in November.

That took total investments by foreign investors in equities to over Rs 97,000 crore in 2013 so far.