Mutual funds exit secondary market to invest heavily in IPOs in November: Report | Jobs Vox


Equity Mutual Funds (MFs) have reportedly been able to offload their assets from the secondary market to create dry powder for the sale of primary stocks. Business level.

According to the data provided by Nuvama Wealth Management, the MFs are in aggregate. 3,300 crore in eight initial public offerings (IPOs) in November. Last month, their total equity investment was stopped 1,700 crore (if there were no IPOs, equity MFs would have been net sellers); 1,600 crore).

“MFS have preferred to engage in IPOs rather than secondary markets,” observes Abhilash Pagaria, Head, Alternatives and Quantitative Research, Nuvama Wealth Management.

Based on his analysis, MFs have invested 900 crore each in Global Health (Medanta) and Arkane Chemical Industries (Arken Chemicals).

The investment in IPOs comes amid record deals. November was the best month for IPOs by deal volume since December 2021, according to the PRIME database.

About 10 IPOs have made a joint movement 10,566 crores.

Despite the MFS’ points for the primary market, the secondary markets performed well due to strong inflows from foreign portfolio investors (FPIs).

In November, the net income of MF schemes fell to a 21-month low 2,260 crores.

Domestic fund managers tend to invest during strong FPI flows (as seen in November).

Also, the IPO bet in November seems to have played out well. Of the eight companies MF has invested in, only two are undervalued, while high-bet stocks such as Medanta, Arkane Chemicals and Bikaji Foods International are currently up more than 25 percent from their IPO prices.

First Published: Dec 19, 2022, 09:44 am IST


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