Mutual funds sold shares worth ₹16,000 crore in 6 days, still have around ₹1.5 lakh crore in cash

Mutual Funds: Mutual funds sold in the stock market for 6 consecutive days last week. Sources said that taking advantage of the recent boom in the Indian stock market, mutual funds have booked profits. Between 20 and 28 March, mutual funds have sold shares worth more than Rs 16,000 crore. Analysts say that this is a sign of profit booking, because in March the Sensex and Nifty had a spectacular rise of up to 6 percent. However, in contrast, they were net buyers at the beginning of the month. From 1 to 19 March, they bought shares worth about Rs 22,900 crore.

The Sensex and Nifty gained 5.8% and 6.3% respectively during the month of March. The BSE Midcap and Smallcap indices saw gains of 7.6% and 8.3% respectively.

Mutual funds have done this selling at a time when they already have a lot of cash lying with them. The cash holdings of mutual funds in active funds were Rs 1.42 lakh crore in January, which increased to Rs 1.46 lakh crore in February 2025.

Experts say that this cash holding shows that fund managers are still cautious about the valuation of the stock market. Also, they are still feeling uncertain about the market movement. Sensex and Nifty have fallen by 12 percent from their peak. However, fund managers are still waiting for more clarity on Trump's tariff announcements, the state of the global economy and geopolitical tensions.

Nikunj Saraf, Vice-President, Choice Wealth, emphasised that the reason behind this cautious stance is the massive sell-off in midcap and smallcap stocks, where valuations had risen to very high levels. However, the increase in cash holdings of mutual funds is not a sign of any kind of bearish stance, but rather a deliberate risk management. Fund managers are waiting for more clarity in the market so that investments can be increased again at the right time.

Mutual funds bought shares worth over ₹1 lakh crore this year

So far in 2025, mutual funds have invested ₹1.08 lakh crore in the Indian stock market. Earlier in 2024, they had bought shares worth a total of 4.3 lakh crores.

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