Once bitten, forever shy. Retail investors are firmly unwilling to patronise equity mutual funds even though the equity markets have risen by a whopping 50 per cent between April 25 and August 29, 2003.

The market capitalisation of stocks traded on the Bombay Stock Exchange increased a whopping Rs 3,44,617 crore (Rs 3,446.17 billion) since April 25, the day when the Sensex tanked to a six-month low.

And yet net inflows into the equity schemes of the domestic mutual funds was a paltry Rs 1,121 crore (Rs 11.21 billion) between March 31 and August 31, 2003. Though there was an increase of Rs 6,752 crore (Rs 67.52 billion) in assets under management (AMU) of equity funds in the said period.

Out of this, Rs 5,631 crore (Rs 56.31 billion) was on account of a rise in market value of portfolio which followed the stock market rally.

The balance amount Rs 1,141 crore (Rs 11.41 billion) is actually the net inflow of investors' money into equity schemes of the domestic mutual funds.

Nevertheless, the domestic mutual funds mobilised Rs 6,310 crore (Rs 63.10 billion) for equity-related schemes between April and August under their growth, balanced and equity-linked savings (ELSS) schemes.

The growth funds mobilised Rs 5,672 crore (Rs 56.72 billion), balanced fund raised Rs 629 crore (Rs 6.29 billion) and ELSS collected Rs 9 crore (Rs 90 million) in this period.

On the contrary, the mutual fund industry saw total outflows of Rs 5,189 crore (Rs 51.89 billion) during the said period.

Outflows from growth funds was higher at Rs 4,212 crore (Rs 42.12 billion) while balanced funds registered an outflow of Rs 782 crore (Rs 7.82 billion) and ELSS saw Rs 195 crore (Rs 1.95 billion) moving out.

The main reason for the investors' lukewarm response to equity-related funds has been a huge depreciation in market value of their investments since February 2000.

Prior to the current rally, the aggregate depreciation in market value of investments between January 2000 and March 2003 was a hefty Rs 20,177 crore (Rs 201.77 billion).

Mutual funds lost Rs 14,514 crore (Rs 145.14 billion) in their growth schemes, Rs 5,204 crore (Rs 52.04 billion) in balanced funds and Rs 459 crore (Rs 4.59 billion) in ELSS.

The stock market rally which can be dated to April 25 has partially helped mutual funds to recover lost ground.

Yet till August 31, 2003, the aggregate depreciation in market value of investments in equity shares stands at Rs 14,600 crore (Rs 146 billion). The loss in growth funds alone has been a whopping Rs 10,000 crore (Rs 100 billion).

Fund mangers also failed to protect themselves and their investors in the downturn in the markets. In the last 44 months, the markets have risen during 22 months and slipped during the remaining 22 months.

The market value of investments of equity funds yo-yoed in line with the broad markets. However, the depreciation in market value was higher at Rs 51,511 crore (Rs 515.11 billion) compared with an appreciation of Rs 36,965 crore (Rs 369.65 billion) in the months that the market went up.