Mutual funds withdraw Rs 13,000 crore from stocks in six months

Continuing their selling spree in the stock market, domestic mutual funds have sold shares worth about Rs 13,000 crore in the first half of 2013, as volatile trends continue to rule the Street.

The funds offloaded shares worth a net amount of about Rs 269 crore in the equity market during June - making it their twelfth consecutive month of net outflows, according to the latest data available with market regulator Securities and Exchange Board of India (Sebi).

The outflows were much larger at about Rs 3,508 crore in the previous month and the net withdrawal by MFs for the first six months of 2013 has reached Rs 12,874 crore.

In comparison, the foreign institutional investors made a net inflow of more than Rs 72,000 crore in the first half of 2013, although they have also turned bearish in the recent weeks and made net outflows of over Rs 11,000 crore in June.

With equity market remaining sluggish, the domestic funds have increased their focus on debt market to benefit from higher interest rates.

Mutual fund investors invested a staggering Rs 64,602 crore in the debt schemes in June, making it highest in the last one year. In June 2012, MFs investors had pumped in Rs 78,761 crore in the debt-oriented schemes.

During the first half of the year, mutual funds have infused Rs 2.92 lakh crore in the debt market.

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.

According to market participants, fund houses have been shifting focus from equity to debt scheme because of volatility in the secondary market and latter offers better returns compared to bank fixed deposits.

Another reason for investing in debt scheme could be lower-risk in it than equity funds.

Meanwhile, BSE's benchmark Sensex slipped 31 points in the first six-month of the year.

At the end of May, there were a total of 1,294 schemes under mutual funds, of which 857 schemes (66 per cent of the overall schemes) were debt oriented while 347 schemes (27 per cent of total schemes) were equity related.