Market Timing and Stock Selection Abilities of Indian Equity Mutual Fund Managers

Mutual funds are an important financial intermediary in India and globally. Mutual funds give an opportunity for investors to participate in the capital markets without much knowledge about the security markets. The main advantage of mutual fund is diversification of risk and professional management of funds. The main aim of the active portfolio manager is to add value through generating excess risk adjusted return over the benchmark. This can be achieved through timing the market and stock selection. Therefore this study aims to analyze the market timing and stock selection abilities of fifty equity mutual funds using unconditional and conditional versions of Treynor and Mazuy (1966) model and the Henriksson and Merton (1981) model. The results of the study reveal that there is presence of stock selection and no market timing ability of the selected mutual funds.