Mutual Funds Deploy Cash Aggressively Amid Market Correction: Mutual funds turned record buyers in Indian equities in March, investing ₹98,746 crore, the highest-ever monthly buying, as they used the market correction to deploy money actively. Meanwhile, cash holdings declined to ₹1.86 lakh crore from ₹2.10 lakh crore in February. As a result, the cash-to-equity AUM ratio edged lower, indicating stronger equity deployment despite healthy inflows.
AMC Cash Levels Ease, but Caution Persists: The average cash holding ratio across the top 20 AMCs eased to 5.16% in March from 5.39% in February, reflecting higher cash deployment as market opportunities improved. However, with equity AUM under pressure and the ratio still above 5%, fund managers appear to be maintaining a cautious stance while retaining sufficient liquidity to manage volatility and capitalise on emerging opportunities.
PPFAS Mutual Fund holds the highest cash-to-AUM ratio at 21.76% (₹29,327 Cr), reflecting a distinctly defensive stance with strong flexibility for future deployment. Quant MF follows with a notable 13.82% (₹10,005 Cr), while Axis MF (9.31%) and Bandhan MF (6.31%) also maintain relatively elevated cash allocations, indicating a cautious yet opportunity-driven investment approach.
Flexi Cap Funds Lead in Cash Intensity: Parag Parikh Flexi Cap Fund holds the highest cash-to-AUM ratio at 22.25% (₹28,698 Cr), signalling a defensive yet opportunity-ready stance. HDFC Flexi Cap Fund follows with ₹6,327 Cr in cash, or 6.93% of AUM, indicating liquidity available for tactical deployment as market conditions evolve.
Contra, Focused & Small Cap Schemes Hold Strong Buffers: SBI Contra Fund maintains high liquidity at 16.33% (₹7,143 Cr), reflecting a cautious yet opportunistic approach. SBI Focused Fund holds 10.58% (₹4,206 Cr) in cash, while SBI Small Cap Fund and HDFC Small Cap Fund maintain 11.76% and 10.30% respectively, highlighting prudent buffers amid market volatility.
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