without having the stocks in the demat ; can institutions and MFs sellshort cash equity and then buy ; in intraday ?
No. MFs are more likely to do this stuff in FNO rather than cash
if the mutual fund houses can trade in f&o derivatives in the bearish market ; why all the MFs NAVs is down ?
(for those stocks that are not in f&o) ; without having the stocks in the demat ; can institutions and MFs sellshort cash equity and then buy ; in intraday ?
I don’t think any MF does intraday trading with their stocks. NAVs are down because stocks are falling.
The prices are down more because of massive selling by FIIs.
Very few MF trade F&O. I think there’s no such MF in India and only 2-3 in US, which trade in F&O.
No one can sell stocks that they don’t have. Even when we short sell, we are borrowing them from the broker. So, no MF can’t sell stocks without having them in demat.
Mutual Funds come with an inherent promise of lower risks than Equities. Trading in FNO or intraday would invite a lot of regulatory ire, and is unlikely to ever happen on a large scale by MFs.
MFs could have hedged the positions with the future selling / call selling / put buying !
then why did not they do ?
No, MFs are not allowed to short sell on any underlying security on an intra-day basis even for a few moments in actual or potential leverage.
But on equity oriented schemes, MFs can take derivatives position only for hedging/balancing of their cash position, which shall have a maximum derivatives net position of 50% of the portfolio.
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if this is so , then , MFs could have hedged the positions with the future selling / call selling / put buying , in this bearish market !
then why did not they do so ? Why all the MFs NAVs are down ?