Post Monday Mayhem statistics reveal that the FIIs alone might not have been the market movers, the Mutual Funds (MFs) too were crucial players. This article discusses the relevance and growing importance of MFs in India.

Though Mutual Fund in India is still at a nascent stage, it has traveled a long distance. It can act as a Contrarian Fund in the Indian market if the government can give it more room.The Indian stock market has come a long way from 8,000 mark to the peak of 12,612 mark. Of late, the market has become even more unpredictable than ever, but amidst this volatility the Indian capital market found an interesting fund that can act as a market saver in the long-run.

Contrary to the usual belief that Foreign Institutional Investors (FIIs) have been the prime movers of the liquidity-fuelled rally since April, the net investment figures put out by the Securities and Exchange Board of India (SEBI) reveal that the market sentiment was dictated by Mutual Funds (MFs) as much as it was dictated by the FIIs. During the `market mayhem' in May 2006, FIIs were the net sellers. But MFs went against the herd and became the net buyers that kept the Sensex in the positive territory. As released by Sebi, MFs pumped nearly Rs. 2,800 cr in April when FIIs were the net sellers. In the first ten days of May both the FIIs and the MFs together invested Rs. 5,000 cr (Rs. 3,700 cr and Rs. 1,200 cr respectively) and drove the market to a new high on May 10. Starting from May 1, the FIIs were the net sellers on every single day till June 1. That triggered a sharp drop in trading volumes from an average of Rs. 15,200 cr in April to Rs. 11,800 cr by the second week of June. But the MFs came out to rescue the market and played an important role during this `market mayhem'.

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