North India Statesman
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Ahmedabad: Indian stock market witnessed significant inflow of cash into equity schemes of mutual funds in July amid concerns over volatility and high valuations after the first Union Budget of Modi 3.0. Cash liquidity levels also remained high due to strong inflows in NFOs.
According to a report by Motilal Oswal, equity schemes of 26 major mutual fund companies had cash in hand at the end of June 2024 of Rs. 62,700 crore, which increased to around Rs. 80,000 crore at the end of July 2024. With this, the total cash ratio in these schemes has increased to a 15-month high of 5.4 per cent. In June, the schemes had 4.6 per cent of their portfolio in cash.
According to Motilal Oswal's report, Parag Parikh Financial Advisory Services Fund has the highest cash holding of 16.1 per cent. After this, Quant Fund has 14 per cent cash. Parag Parikh Fund has cash for more than seven months but Quant had only 7.2 per cent cash in June.
Other funds that saw a significant increase in cash include ICICI Prudential, Franklin Templeton, Sundaram and Motilal Oswal. However, on the other hand, there are other funds that saw a decline in cash liquidity and these include SBI and Aditya Birla Fund House. Cash levels were also boosted by strong collections in the NFO during July.
According to mutual fund officials, given the investment supply, it is imperative to dive completely into the market and invest all flows, but in case of uncertainty and high valuations, it is advisable to hold cash. Valuation concerns have persisted for almost a year, especially in midcaps and smallcaps, but equity fund schemes are consistently seeing strong inflows and mutual funds are also constantly increasing this investment in the market.
