Date:21/04/2006 URL: http://www.thehindubusinessline.com/2006/04/21/stories/2006042104521700.htm

Back Mutual funds also participate in Sensex rise

Nilanjan Dey

Fund houses say their role in rally is not insignificant

Kolkata , April 20

Mutual funds seem to have contributed their bit to the pace in which the Sensex has powered ahead to cross 12,000 points and more.

Fund houses, some of which have in recent times reported sizeable additions to their asset base, thanks to NFOs that were a hit with investors, concede that their role in the latest rally has not been insignificant.

Part of the money that was collected in the recent past is rolling into the market, supplementing other institutional investors' allocations, commented a senior MF source, adding that the combined effect is pushing the broad market towards higher levels.

A fund executive whose asset management outfit has recently come to handle money collected by a close-end scheme suggests that fund houses cannot wait indefinitely for the market to cool off. Nor can money collected for active equity investment be parked in short-term instrumentslike fixed deposits for long. Distributors, who say that their clients have already brought in substantial money to new offers, feel the trend will only assume bigger proportions. Response to the next round of NFOs will have to be watched closely for confirmation of this view, they add. Some NFOs are waiting to take off in the coming days, it may be mentioned.

Also, a few offers are either open for initial subscription at the moment or have just closed the initial window.

Fidelity Special Situations Fund, for instance, is open for the next few days, while Franklin Templeton's Equity Income Fund has completed the NFO process. As for forthcoming products, Standard Chartered MF's Enterprise Equity Fund will be open till the middle of next month.