By Vineet Kumar 
Cash is King, and the King is in Action Mode
Mutual funds were on a shopping spree in October, investing a staggering ₹89,000 crore, as per SEBI data. This figure is nearly three times the ₹30,000 crore deployed in September, signaling a decisive shift in strategy by fund managers. Clearly, they seized the opportunity presented by a market dip to put their cash reserves to work.
According to the Association of Mutual Funds in India (AMFI), net inflows into mutual funds hit a record ₹41,000 crore in October, up 21% month-on-month. However, the significant ₹89,000 crore deployment suggests that fund houses went beyond just new inflows. They dug into their existing cash reserves, capitalizing on the correction in the markets.
Shweta Rajani, Head of Mutual Funds at Anand Rathi Wealth, explained this move: “The market’s drop from its peak of 26,200 to 23,500—a correction of 11% over two months—brought valuations to more reasonable levels. This was the perfect window for fund managers to act. Many investors who had been sitting on the sidelines, waiting for a correction, finally stepped in.”
This sentiment was echoed by Akhil Chaturvedi, Chief Business Officer at MOSL. He observed a noticeable uptick in buying interest, even among new entrants. “Assets that were previously expensive suddenly became more affordable. This naturally attracted investors,” he said.
For instance, think of a blue-chip stock like HDFC Bank. Its price might have seemed out of reach for many investors a few months ago. However, after the correction, it suddenly appeared on the shopping list of fund managers. Chaturvedi added, “We had some cash in our portfolios, but over the last few weeks, we’ve deployed it fully, taking a fully-invested position.”
Dynamic strategies also played a role. Abhishek Tiwari, Chief Business Officer at PGIM MF, highlighted that while their equity portfolios typically maintain less than 5% cash, the industry overall saw some fund houses leveraging market volatility to deploy reserves. “Dynamic equity funds have been reshuffling their allocations, and new fund offers (NFOs) are being actively deployed,” he noted.
Looking ahead, Chaturvedi believes there’s still 4-5% cash waiting to be deployed in the market. “Fund managers will continue to invest selectively, especially as fresh inflows keep coming,” he said.
This proactive approach by mutual funds underscores a vital lesson: timing the market might be tricky, but recognizing opportunities during a correction can be highly rewarding. Whether it’s a seasoned investor or a newcomer picking up blue-chip stocks at fair valuations, October demonstrated that cash truly is king—especially when deployed wisely.
