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As benchmark equity indices are trading at all-time highs, fund flows in equity-oriented mutual fund schemes stabilized. According to data released by the Association of Mutual Funds in India, the net inflows of open-ended equity mutual funds are almost similar to August figures to Rs 8,677.41 in September compared to Rs 8,666.68 crore in August 2021.
The MF industry’s total AUM increased marginally by 0.4% MoM (Month on Month) to Rs 36.7 lakh crore in June 2021, primarily led by an MoM increase in AUM of equity funds (Rs 47,600 crore), other ETF funds (Rs 18,600 crore), and balanced funds (Rs 14,300 crore).
“Equity AUM (including ELSS and index funds) of domestic MFs rose by 3.7% MoM to Rs 13.3 lakh crore in September 21, led by a rise in market indices (Nifty up 2.8% MoM). The month saw a rise in sales of equity schemes (up 11.5% MoM to Rs 40,900 crore). The pace of redemptions picked up to Rs 31,400 crore (up 17.5% MoM). Consequently, net inflows moderated to Rs 9,600 September 2021 from Rs 10,000 crore in Aug’21,” said Deven Mistry, Research Analyst at Motilal Oswal.
Sector swap
The month saw notable changes in the sector and stock allocation of funds. On a MoM basis, the weightage of Utilities, Oil & Gas, Automobiles, Real Estate, PSU Banks, Consumer Durables, Retail, and Media increased, while those of Telecom, Metals, Private Banks, Healthcare, Technology, Cement, Insurance, and Chemicals moderated.
This sectoral rotation saw Automobiles’ climbs to 6.1% (+20bp MoM and -50bp YoY) after reaching 17-month low in Aug 2021. While Utilities’ weight reached seven-month highs of 3.4% (+50bp MoM; -30bpYoY); the sector hit a 49-month low in Aug’21. Metals moderated for the second consecutive month to 2.8% in Sep’21 (-30bp MoM; +70bp YoY), 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 2021. Bajaj Auto, Tata Motors, SBI Life Insurance, Tech Mahindra and Bajaj Finserv were among the top 5 Nifty stocks that saw net buying by mutual funds. On the other hand, HDFC Life Insurance, Bharti Airtel, Hindalco, Shree Cement, and Eicher Motors are the top-5 Nifty stocks in which the mutual fund industry reduced stake.
“In September, three of the top ten stocks that saw the maximum increase in value were from the banking space. Reliance Industries, NTPC, Kotak Mahindra Bank, ITC, SBI, Coal India, HDFC Bank, ONGC, HCL Tech, and Tata Motors increased the most in terms of value MoM,” a Motilal Oswal report noted.
Stocks that saw the maximum decline in value MoM were Bharti Airtel, Tata Steel, ICICI Bank, Infosys, BPCL, Divi’s Labs, UltraTech Cement, HDFC Life Insurance, Max Financial Services, and Hindustan Unilever.
Top schemes
According to an analysis by Motilal Oswal Financial Services of the Top 25 schemes by AUM, the following reported the highest increase were HDFC Flexi Cap Fund (+6% MoM change in NAV), ICICI Pru Value Discovery Fund (+5.9% MoM), HDFC Small Cap Fund (+5.7% MoM), HDFC Top 100 Fund (+4.6% MoM), Nippon India Small Cap Fund (+4.3% MoM).