While the markets were facing one of their worst slumps ever, fund managers grabbed the opportunity to pick stocks real cheap.

Figures released by the Securities and Exchange Board of India (SEBI), the market watchdog, reveals that MFs have been net buyers since 30th March 2000.

This implies that while redemption pressure was at its peak, fund managers were actually buying (and not selling). There can be two possibilities to explain this anomaly. a) Fund managers were sitting on sufficient cash to take care of the redemptions, without having to offload their stocks. Moreover, they also received some fresh inflows from investors, with which they could buy stocks from the market, or b) The net effect of redemptions and fresh inflows was insignificant, and fund managers' cashflow position was not affected dramatically. At the end of the day, there was enough cash with them to buy stocks.

What actually happened could well be a combination of both the above possibilities. Given the free fall in stock prices (especially infotech), fund managers may have bought stocks like NIIT, Satyam Computers, Aptech, Global Tele, Zee Telefilms at rock bottom prices. If it weren't for the buying interest from the fund managers and the FIIs, the markets would have slumped even more sharply.

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