After declining for two months in a row, contribution to equity mutual funds rose in the month of September, the AMFI (Association of Mutual Funds in India) data reveals. The inflow to equity mutual funds touched ₹14,099 crore last month. This was more than double of equity inflow in the month of August i.e., ₹6,119 crore. and even higher than the July inflow of ₹8,898 crore, but lower than the June inflow of ₹15,497 crore.
As far as equity schemes are concerned, sectoral funds saw an inflow of ₹4,418 crore, followed by flexi-cap and mid-cap funds which saw an inflow of ₹2,401 crore and ₹2,151 crore, respectively. The small-cap funds witnessed an inflow of ₹1,825 crore, followed by large and mid-cap find that saw an inflow of ₹1,468.82 crore.
A recent report by brokerage house Motilal Oswal (MOSL) takes a look at some notable changes in the sector and stock allocation of funds:
Sector MF Trends
On an MoM basis, the weights of Consumer, Healthcare, Telecom, PSU Banks, Retail, and Capital Goods increased, while the weights of Oil, Technology, Private Banks, Metals, Utilities, Insurance, and NBFCs moderated, noted the brokerage.
It informed that the consumer sector's weight rose to an 18-month high of 7.1 percent, up 30 bps MoM and 40 bps YoY in September 2022. Meanwhile, the Healthcare sector’s weight, after declining at a 30-month low in August 2022, climbed to 6.6 percent in September 2022 (+30 bps MoM and -60 bps YoY), it added.
The oil & gas sector’s weight, however, slipped to a six-year low of 6 percent (-50 bps MoM; -80 bps YoY) and the technology sector’s weight also continued to moderate and was at a 25-month low of 9.8 percent (-20 bps MoM; -210 bps YoY), MOSL pointed out.
As per the brokerage, private banks with an 18.2 percent weightage remained the top sector holding for MFs in September 2022. It was followed by the Technology sector at 9.8 percent, even as its weight declined in the previous month, it added. Meanwhile, the Auto sector's weight was the third highest among MFs at 7.8 percent followed by NBFCs at 7.7 percent and the Consumer sector at 7.1 percent, stated the report.
Sectors that witnessed the maximum MoM change in their weights in September include Telecom, Media, Healthcare, Real Estate, Consumer, Retail and PSU Banks, revealed the MOSL report.
Stock MF Trends
According to MOSL, the highest MoM net buying in September 2022 was seen in Adani Enterprises (+23.9 percent), followed by Hero Motocorp (+13.3 percent), UPL (12.9 percent), HDFC Life (+12.7 percent), Britannia (+11.6 percent), and Apollo Hospitals (+10.6 percent)
Meanwhile, the highest MoM net selling in September 2022 was seen in Tata Steel (-10.7 percent), JSW Steel (-8.3 percent), Bajaj Auto (-7.3 percent, Tata Motors (-6.5 percent), Grasim (-2.6 percent), and Bharti Airtel (-2.5 percent), it further informed
In terms of value decline MoM, seven of the top-10 stocks were from the global cyclical and private financial space: Reliance Industries (- ₹9,170 crore), ICICI Bank (- ₹5,100 crore), HDFC Bank (- ₹4,820 crore), Tata Motors (- ₹2,090 crore), HDFC (- ₹2,070 crore), Tata Steel (- ₹1,900 crore), and Coal India (- ₹1,370 crore), noted the brokerage.
MF and markets
The Nifty’s two-month winning streak ended in Sep’22. With extreme volatility, the index oscillated within a range of 1,350 points before closing 665 points, or 3.7 percent MoM, lower at 17,094.
This elevated volatility was triggered by global and macro headwinds, reported MOSL.
Even as markets turned volatile and foreign investors began selling Indian equities again in September amid the fear of monetary policy tightening; investors continued to invest in MFs.
MOSL pointed out that inflows and contributions in systematic investment plans (SIPs) reached new highs of ₹12,980 crore in Sep 2022 (up 2.2 percent MoM and 25.4 percent YoY).
Total AUM for the MF industry, however, declined 2.3 percent, MoM, to ₹38.4 lakh crore in September 2022, led by an MoM reduction in AUM for liquid/equity/ balanced funds, noted the brokerage. Conversely, AUM for income fund increased ₹6,800 crore, it added.
Equity AUM for domestic MFs (including ELSS and index funds) also decreased marginally by 0.9 percent MoM to ₹15.8 lakh crore in September 2022 due to higher NFOs launched by mutual fund houses compared with the previous month, which led to an increase in equity scheme sales, noted the brokerage.
Further, market indices closed lower and redemptions increased 15.6 percent MoM to ₹27,600 crore, it added.