April 14, 2023
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Mutual fund houses double equity bets to Rs 55,000 crore in Q4 2023
Mutual fund houses have bought large amounts of equity investing a net amount of Rs 55,000 crore between January and March 2023.
The number is more than double the amount deployed in the preceding three months (October to December), signaling improved valuations. The valuations, which had peaked in October 2021, returned to their long-term average in March 2023.
The average cash level with fund houses was 4.6 percent at the end of March with PPFAS MF having the highest cash component at 13 percent. Compared to February-end data from a Motilal Oswal report, the cash with PPFAS MF is down 1 percent. In the case of PGIM MF, cash component has reduced from 11.5 percent to 6 percent.
MF houses double equity bets. With equities turning attractive, managers of balanced advantage funds (BAF) shifted the allocation from debt to equities in the last few months.
The 12-month trailing price to earnings ratio (PE ratio) of Nifty50 declined to 21 last month from a high of 32 at the end of September 2021.
“Equity market valuations are more reasonable today than in March last year. As a result, we have lowered the cash component across most of our schemes. Despite the prevailing global uncertainty, India is better placed, owing to robust corporate balance sheets, government’s focus on creating long-term infrastructure and initiatives to support a revival in manufacturing,” Anish Tawakley, deputy chief investment officer, equity & head of research, ICICI Prudential AMC, was quoted
At the end of March, the asset management company’s equity allocation stood at a 30-month high of 52 percent, after rising consistently since touching a low of 30.5 percent in November 2022.
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