Equity Funds Hold on Despite Negatives

The markets emerged largely unscathed in May despite darts of negatives hitting the bull's eye. A series of uncharacteristic events notwithstanding, the markets turned resilient and remained in positive territory during the month. In a decision that would change the complexion of the stock market, SEBI decided to ban all deferral products from July 2. Among other key decisions, the regulator is set to introduce options with an eye to widen the range of hedging products while adding more scrips to rolling settlement. The markets were also jolted by the MSCI recast last month though it failed to have a lasting impact. India's weightage in the MSCI emerging market index was cut to 3.9% from 6.9% as the new adjustment is based on free-float – the number of shares available to overseas investors. But for the hike in FII investment limit to 49 per cent, the weighatge could have dropped further. However, even as the bellwether survived the ban on badla and the MSCI recast, it finally buckled under FITCH downgrade. The revision of India's sovereign rating outlook to negative from stable saw the Sensex plunge by whopping 184 points in the last three trading sessions but it still ended the month with a net gain of 112 points or 3.2%. While the Sensex was in positive territory in May, it is still in red with a loss of 8.56% on a year to date basis. That the market survived the tremors is largely attributed to FIIs' unflinching faith in Indian equities, which poured