Depressed state of equity markets combined with redemption pressure has forced funds to offload in a falling market.

As is evident from the chart, March has seen more selling than buying by funds. Funds were forced to sell despite falling stock prices to meet redemption requests. And share volumes fell dramatically. Volumes were so low, that according to some newspaper reports, funds delayed redemptions by close to 10 business days as against 3-4 business days under normal circumstances. However, when markets were down, some funds took the opportunity to buy, as some stocks were available at attractive valuations.

With market sentiment still very gloomy, funds are unlikely to witness any relief in April as investors queue up for redemptions and volumes continue to remain dismal.

Add Comments