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After hitting a 14-month high in May this year, inflows into equity mutual funds have slowed down a bit in June. The Association of Mutual Funds in India (AMFI) data shows that net inflow stood at Rs 5,988.17 crore, a drop of 41% compared to Rs 10,082.98 crore in May due to investors booking profits. The MF industry’s total AUM increased 1.9% month-on month (M-O-M) to Rs 33.66 lakh crore in June 2021, primarily led by an M-O-M increase in AUM of equity funds (Rs 41,300 crore), arbitrage funds (Rs 8,900 crore), and balanced funds (Rs 7,600 crore).
“Equity AUM, including ELSS and index funds of domestic MFs, increased 3.7% M-O-M to Rs 11,500 crore June 2021. This was on account of a rise in market indices (Nifty up 0.9% M-O-M) and an increase in equity scheme sales (up 5.7% M-O-M to Rs 29,200 crore). Simultaneously, redemptions increased 33.5% M-O-M to Rs 22,900 crore,” Motilal Oswal said in a report.
Sector swap
June saw notable changes in the sector and stock allocation of funds. On an M-O-M basis, the weights of technology, capital goods, healthcare, automobiles, and insurance increased while the weights of private banks, oil & gas, banks – PSU, and telecom moderated, said Deven Mistry, research analyst at Motilal Oswal.
This sectoral rotation saw technology scaling new heights as its weight increased to 11.7% (+70 basis points M-O-M; +350 basis points year-on-year) while capital goods’ weight increased for the second consecutive month to a 16-month high of 5.3% (+30 basis points M-O-M; +70 basis points Y-O-Y). On the other hand, private banks weight hit a nine-month low to 17.2% (-80 basis points M-O-M; flat Y-O-Y), according to data sourced from the AMFI and mutual fund database NAV India and analysed by Motilal Oswal Financial Services.
Stock play
Mutual funds were net buyers in 60% or 30 Nifty stocks and reduced holding in 40% or 20 stocks in June.
JSW Steel, HDFC Life Insurance, Tech Mahindra, Bajaj Auto, and Hero MotoCorp were among the top five Nifty stocks that saw net buying by mutual funds. On the other hand, Indian Oil Corporation, Grasim Industries, Titan, ONGC and Tata Consumer are top five Nifty stocks in which the mutual fund industry reduced its stake.
“In June 2021, three of the top five stocks that saw the maximum increase in value were from the technology space. Infosys, TCS, Bharat Electronics, Bajaj Finance, Tech Mahindra, TVS Motor, CG Consumer, Avenue Supermarts, Maruti Suzuki, and HDFC Bank increased the most in terms of value M-O-M,” the report noted.
ICICI Bank, Kotak Mahindra Bank, Lupin, Cholamandalam Investment & Finance, GAIL, SBI, Adani Ports, Petronet LNG, NMDC and Deepak Nitrite witnessed the maximum declines in value MoM.
Top schemes
According to an analysis by Motilal Oswal Financial Services of the top-25 schemes by AUM, HDFC Small Cap Fund (+8.6% MoM change in NAV), Nippon India Small Cap Fund (+6.6% MoM), Kotak Emerging Equity Fund (+5.8% MoM), Axis Midcap Fund (+4.9% MoM), and DSP Midcap Fund (+4.2% MoM) stood out.