"The fund houses are waiting for the desired correction to take place as there is a gap in the market right now. MFs plan to enter the market when the fundamentals are good," R K Gupta, managing director, Taurus Mutual Fund said.
According to Mutual Fund Monthly Performance Report by Reliance Money, the fund houses were sitting on a cash pile of Rs 20,108.92 crore (Rs 201.08 billion) at the end of April, 2009.
Sitting on a huge cash pile, the fund houses are well equipped to maintain buying interest in equities and propel the market forward, analysts said.
"The surplus cash with the MFs will get absorbed very soon as the equity schemes are the best way to maximize returns of the fund houses. Going forward they would cash in on the rock-bottom valuations in the equities," Gupta added.
Marketmen said fund houses were waiting for a correction post the general elections, however, the market went up after the decisive verdict in the elections. This led fund houses to seek more time for deploying their cash resources.
In April, FIIs invested a net Rs 6,508 crore (Rs 65.08 billion) in equities while MFs made net purchases to the tune of Rs 38.90 crore (Rs 389 million).
