Mutual funds have been having a harrowing time the last few days.
While equity funds are going great guns, liquid funds are facing tremendous redemption pressures.
Over the past few days, redemptions amounting to crores of rupees have taken place amongst the floating rate and liquid funds.
Market watchers say that Birla and Templeton have faced around Rs 1,000 crore (Rs 10 billion) of redemptions each, while Prudential ICICI around Rs 2,500 crore (Rs 25 billion). HDFC and Kotak have faced redemptions around Rs 800 crore each (Rs 8 billion).
The reason behind this being the massive liquidity crunch in the market and
As of Wednesday, call rates hovered in the 6.35% vicinity, a sharp jump from the 5.30% level last week.
The liquidity mismatch in the system is result of the advance tax payments made. The market players expect the situation to settle by the weekend or by beginning of next week.
If you have invested in a liquid fund or a floating rate fund for your short term needs, don't redeem your units. Hang on.
