When the stock market continues to decline, many good stocks are getting at discounts, even then big mutual funds are avoiding investing in the market! Why? Are they expected to fall further in the stock market or are they preparing for any other big bets?
The Sensex and Nifty have fallen by about 7% in the last 6 months. Smallcap and midcap indexs have declined by 18 to 22 per cent during this period. There are many reasons, including the selling of foreign investors, and the weak quarterly results of companies and global uproar, which are constantly under pressure on the stock market. Donald Trump’s import tariff and weakness in Indian rupee have also weakened the morale of investors. Foreign investors have withdrawn more than Rs 1 lakh crore from the Indian market only so far this year!
Now the biggest question here is when the market is at discount after such a decline, then why are the big fund managers shying away from putting money?
The Prime database has collected some figures related to active equity mutual funds. These figures show that about Rs 1.42 lakh crore cash was held near active equity mutual funds in January 2025. This is not just a matter of January, active equity mutual funds have kept a lot of money by holding a lot of money since August 2024. In August 2024, he had a cash of Rs 1.46 lakh crore.
If you are wondering who are involved in these active equity mutual funds, then let us tell you that largecaps, midcap, smallcap, multicap, dividend yield, contrast, value, focused, sectoral/themetic, flexi cap and elss mutual Funds also include.
Ravi Kumar TV, founder of Gaining Ground Investment Services, said, “Fund managers are not investing money due to high valuation. They can continue to hold cash until they make comfort about valuation.” He said that every day a new figure comes in the market, the effect of which is seen on many sectors and stocks. In such a situation, fund managers are waiting for stability in the market.
Which funds are doing the most cash hold?
If we talk about the top mutual fund house, then SBI Mutual Fund, HDFC Mutual Fund and ICICI Prudential Mutual Fund have held the most cash. SBI Mutual Fund has Rs 24,008 crore, HDFC Mutual Fund has Rs 18,496 crore, ICICI Prudential Mutual Fund is lying in cash of Rs 15,488 crore. The most cash holding is with Motilal Oswal Mutual Fund at the percentage. In January 2025, it kept the total equity AUM in 16.55% cash.
But in the midst of all this, the attitude of PPFAS Mutual Fund is different. He has started investing in this decline of the stock market. The cash holding of this fund came down to 9.57% in January, which was 14.75% in November 2024.
What does this data mean for investors?
Cash holding figures of mutual funds are important because it indicates the direction of the stock market. If mutual funds are keeping more cash, it means they are expecting a decline in the market. On the other hand, if there is a decrease in their cash holding, it means that the funds have started investing money and they are now seeing the possibility of going over the stock market.
Rushabh Desai, founder of ‘Rupee with Rushabh’ Investment Services, believes that large cap stocks are currently on attractive valuation, but the midcap and smallcap sector still looks a bit expensive. Rushabh said that “If an investor has Rs 100, then you can invest Rs 60-70. The remaining amount should gradually invest in the next few months in view of the market move.”
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