In India, mutual funds bought shares amounting to Rs 13,700 crore in May while foreign portfolio investors sold shares worth Rs 8,080 crore in the same period.
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Rising oil prices and a weakening rupee took a toll on investor sentiment in May. But investors could take heart from the fact that Sensex —one of India’s two stock benchmarks — was among the handful of emerging markets that ended higher this month.
India’s Sensex was up 0.5 per cent for the month while Nifty ended marginally lower. China, Russia and Taiwan were the other emerging markets that ended firm. South Korea, Singapore, Brazil, Indonesia, Thailand and Malaysia ended down 0.2 per cent to 10.9 per cent. Analysts said it is surprising that India’s benchmarks managed to stay afloat in the emerging market sell-off because the trigger for the decline has been oil prices. India imports 80 per cent of its oil requirements. Rising oil prices have increased the country’s import bill and put pressure on the rupee. The market’s strength relative to most emerging markets was due to the domestic fund inflows and strength in select bluechips like Bajaj Finance and HDFC Bank.
While benchmarks indices managed to stay resilient, the bigger pain was in mid and small cap shares. BSE’s mid and small-cap indices declined 5.3 per cent each during the month. Many small-cap stocks have declined 20-40 per cent in May. Portfolio Management Services or PMS firms, which have been the biggest buyers of these smaller shares in the last two years, have been forced to dump them because of redemption pressures. Reclassification of mutual fund portfolios, as mandated by Sebi, which also resulted in exit from various mid and small-cap stocks also contributed to their recent weakness.
In India, mutual funds bought shares amounting to Rs 13,700 crore in May while foreign portfolio investors sold shares worth Rs 8,080 crore in the same period.
