Mutual Funds: AUM witnessed fall in Dec '12
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Overview: The Assets Under Management (AUM) of Indian Mutual Fund industry witnessed a fall during December 2012 by 3.25% M-o-M due to fund outflows from Liquid and Income categories (Source: AMFI Monthly data). It was mainly attributable to the redemption from these categories by the banks and corporates to meet their quarterly requirements. Among categories, maximum growth during the month was observed in the AUM of Gilt Funds category by 19.79%, while the AUM of Liquid category dropped the most by 15.48%. The month end AUM of the industry for December 2012 stood at Rs. 7.60 lakh crore, down from Rs. 7.93 lakh crore in November 2012. The Average Assets Under Management (AAUM) of the industry, which is declared by quarterly basis, saw rise to Rs.7.93 lakh crore (including FoF - Domestic corpus) in Oct-Dec 2012, up by 6.24% from the previous quarter.
- Equity Markets: The key benchmark indices, Sensex and Nifty closed the month with marginal gain of 0.4% and 0.5% respectively during the month of December 2012 on the back of sustained global cues and hopes of further reforms. The US Fiscal Cliff affected global as well as domestic indices. Domestic monthly data on growth and Inflation surprised positively. IIP for October surged 8.2% y-o-y. WPI inflation eased to 7.2% y-o-y in November. All sectoral indices ended on a positive note last month except Oil & Gas. Consumer Durable, Realty, Bankex, FMCG and Auto were the top five gainers during the month.
- Debt Markets: The Indian debt markets witnessed moderation in their yields during the month of December. The markets continued to trade on a positive note over the month. benchmark, ‘G Sec 8.15% GS 2022’ bond yield closed at 8.05%, down by 12 bps over the month. Major factors that influenced the market sentiments positively during the month included speculation over further OMO announcements, OMO announcement, lower than expected reading on inflation, hint on no additional borrowing requirement through G-Sec. Some of the other factors such as tight liquidity condition due to advance tax flow for the quarter, higher than expected reading on IIP numbers, the RBI’s stance on keeping the rates unchanged, concerns over the US fiscal cliff issues dampened the G sec market.
- The liquidity condition in the system further hardened during the month compared to the previous month. The average net LAF infusions during November were at around Rs 1.12 lakh crore against Rs 92,750 crore seen previous month. Liquidity condition witnessed tight in the month on the back of festive season coupled with third quarter advance tax outflows. Liquidity situation is likely to moderate coming weeks as there is no extra borrowing from the government side. Possible OMO announcement will further reduce the stress on the liquidity.
In its Mid-Quarter Monetary Policy Review - Dec ’12, the RBI kept repo rates and cash reserve ratio unchanged. However, the central bank has hinted that it may cut policy rates next month.
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