Mumbai
Mutual fund investors are rejoicing the bullrun in the stock market. Most equity mutual fund schemes saw their NAVs rallying up to 8.31 per cent in a single day on Friday, after the Finance Minister Nirmala Sitharaman announced a cut in corporate tax rates for domestic companies and new local manufacturing units.
The scehmes are likely to post handsome gain today, too. The market barometer – S&P BSESensex – gained 1,100 points on Monday. The bellwether gained over 3,000 points in two days.
Kotak Standard Multicap Fund, the largest actively-managed equity fund with AUM of Rs 25,381 crore, saw a jump of 5.56 per cent in its one-day NAV as on September 20. The largest gainers of the one-day rally were the banking ETFs. Kotak Banking ETF, Reliance ETF Bank BeES and SBI ETF Nifty Bank Fund gained 8.31 per cent in one-day period as on 20th September.
The biggest equity fund SBI ETF Nifty 50 witnessed a 5.32 per cent increase in its one-day NAV. The scheme manages assets worth Rs 55,934 crore.
BSE Bankex rose around 8.5 per cent on Friday itself from the levels of 30,100. The index has been on a rising spree since morning. By 1:25 p.m., on Monday, the index has risen to 34,340 level.
The benchmark indices BSE Sensex rose 1,725 points in the Friday session.
The finance minister has proposed to bring down the basic corporate tax rate from 30 per cent to 22 per cent and 15 per cent for new manufacturing units set up after October 1.
Mutual fund advisors believe investors will find some more time to cheer as the investors would be covering their short positions before Thursday this week.
” There are around 65,000 contracts on short position which investors will cover before this Thursday and therefore we can see some more rally this week. However, once the markets normalise, we might see some nominal losses next week ,” says Chokkalingam Palaniappan, Founder, Prakala Wealth Management. He adds, “Last 10 years have not been great for equity investors but after the tax cut announcement, if everything goes as planned, the economic changes will benefit equities.”
According to mutual fund advisors, there will be a change in sentiment in the market after this major economic reform. However they believe mutual fund advisors should not get carried away by this rally and should continue with their long term investments as planned.
Mutual fund advisors also believe that the mid and small caps which were beaten for the past 18 months have the potential to benefit from the economic recovery.
” At this point of time if at all someone wants to make a tactical move, they may look at increasing their allocation or invest in mid and small cap funds, “, says Chokkalingam.
