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Mutual funds have sold heavily in the last 6 sessions. Experts believe that they have made profits by taking advantage of the recent market boom. Mutual funds sold shares worth more than Rs 16,000 crore between March 20 and 28. Earlier, at the beginning of the month, mutual funds had bought shares worth more than Rs 22,900 crore between March 1 and 19.
The rise seen in the stock market was
seen last month with the benchmark index Sensex rising 5.8 per cent and Nifty rising 6.3 per cent. While there was a sharp rise of 7.6 per cent in BSE Midcap and 8.3 per cent in Smallcap index. This sell-off happened when the cash holdings of mutual funds in active equity funds increased from Rs 1.42 lakh crore in January to Rs 1.46 lakh crore in February 2025. Concerns did not go anywhere Experts believe that this increasing cash reserve indicates deep concerns about valuation and market direction. Fund managers remain cautious after a decline of about 12 per cent from the recent peak. This reflects uncertainties about economic conditions around the world, Trump's proposed tariffs and ongoing geo-political tensions. Nikunj Saraf, Vice President, Choice Wealth, said that a major factor behind this cautious stance is the sharp sell-off in small and mid-cap stocks, where valuations had risen to unsustainable levels. This is not a sign of recession, but a way to manage risk wisely. Fund managers can wait until the market picture becomes more clear before re-entering. An attempt to protect investors Increasing cash holdings also reflects a defensive strategy to protect investors' capital from potential market corrections and also positions the fund to capitalize on attractive opportunities. According to the research desk of SMC Global Securities, this trend may reverse when the Indian market gets relief from global tariff concerns and selling by foreign investors (FIIs).
Read More: Stocks to Buy: These stocks are expected to rise up to 40%, investment advice received this week
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