Inflows in equity mutual funds dropped to a 10-month low level at ₹6,120 crore in August on account of investors taking a cautious approach and temporarily shifting money from equity to debt due to the rising interest rate scenario.
This was the 18th straight month of inflows in equity mutual funds (MFs) but the pace of inflow has been declining over the past few months.
The net inflows in August were lower compared to ₹8,898 crore in July, ₹15,495 crore seen in June, ₹18,529 crore in May and ₹15,890 crore in April, according to data released by the Association of Mutual Funds in India (Amfi).
The month of August saw the lowest level of inflow since October 2021, when equity mutual funds had attracted ₹5,215 crore. Equity schemes have been witnessing net inflow since March 2021. These schemes had witnessed outflows for eight months from July 2020 to February 2021, losing ₹46,791 crore.
Brokerage house Phillip Capital lists the top buys and Sells across sectors by MFs
Let's take a look at the top stocks bought by MFs in August. Among largecaps, Zomato, NTPC, ONGC, Ambuja Cements, and Tata Power witnessed the highest inflows, noted the brokerage. Meanwhile, among midcaps, NHPC, PNB, Sona BLW, IDFC, and Max Healthcare were bought the most by mutual funds, it informed.
Now, let's look at the top stocks sold by MFs in the previous month. Among largecaps, Tata Steel, GAIL, Bharti Airtel, HDFC Life, and Bharat Electronics saw the highest outflows while IDFC First Bank, Vodafone Idea, NMDC, Motherson Sumi Wiring, and GMR Infra were the midcap stocks that were sold the most by MFs, the report stated. In the small-cap segment, Hathway Cable & Datacom, Kirloskar Oil Engines, City Union Bank, Mangalore Refinery, and Oriental Hotels were the top sells, it further revealed.
According to the report, Utilities sector saw higher buying with its weight rising to 2.6 percent, up 36 bps MoM, followed by Telecom & Media, at 3.2 percent, up 31 bps MoM, Auto & Ancillary at 8 percent, up 27 bps MoM, Oil & Gas at 6.4 percent, up 21 bps MoM, Financials (at 31.7 percent, up 14 bps MoM and Industrials at 6.6 percent, up 8 bps MoM.
Financials continued to remain the sector with the highest weightage for MFs in August, noted the report followed by IT at 10 percent.
However, in August, MFs reduced their weight in the IT sector the most, down 59 bps MoM. Despite this reduction, the sector continues to hold the second highest weightage in MFs.
Apart from IT, the report stated that Healthcare saw a 24 bps MoM cut at 6.4 percent, Staples' weight fell to 5.1 percent, down 16 bps, and discretionary sector weight was cut by 10 bps MoM to 7.6 percent.
Sector-wise changes in stock holdings
In the Utilites sector, NHPC, NTPC, Tata Power, CESC, and SJVN saw the highest inflows, noted Phillip Capital. Meanwhile, in Telecom & Media, HFCL, TV18 Broadcast, PVR, Tata Communications, and Sun TV Network were bought the most.
In the Auto & Ancillary sector, the report said that Sona BLW, Tata Motors-DVR, Samvardhana Motherson International, Rolex Rings, and Maruti Suzuki were the top buys while in the Oil & gas space, ONGC, Oil India, Indraprastha Gas, Gujarat Gas, and Mahanagar Gas held the highest weight.
On the other hand, the report pointed out that Wipro, Infosys, Tech Mahindra, TCS, and HCL Technologies were sold the most in August whereas, in the Healthcare sector, Granules, Aurobindo Pharma, Torrent Pharma, Piramal Enterprises, and Dr Reddys were the top sells.
Experts attributed the lower inflow to investors taking a cautious approach this month and money is temporarily shifting from equity to debt considering the rising interest rate scenario.
"Equity MF inflows, while positive, have moderated in recent months. There is usually a psychological tendency amongst domestic investors to book profits near all-time highs (especially when the markets have corrected post hitting similar levels in the recent past), which is also getting reflected in the lower quantum of inflows," Arun Kumar, Head of Research, FundsIndia, said.
Meanwhile, the monthly SIP (systematic investment plan) contribution touched an all-time high of ₹12,693 crore in August and the number of SIP accounts too rose to an all-time high at 5.71 crore crossing the June high of 5.61 crore.