Thanks to a growing sense of investors’ confidence and higher retail participation in mutual funds, inflow to equity funds witnessed a considerable surge in the month of January.
Overall inflow to equity mutual funds surged to ₹12,546 crore in January from ₹7,303 crore in Dec, reporting an increase in 71.79 percent, the latest Association of Mutual Funds of India (AMFI) data reveals.
The month saw notable changes in the sectoral allocation of funds. In a recent report, domestic brokerage house Motilal Oswal highlighted that in Jan, the weight of the IT sector rose 50 bps, MoM, to 10.2 percent after declining to a 28-month low in December 2022.
Weight of automobile, capital goods, consumer, metals, and insurance sectors also witnessed an increase in Jan, it stated. As per the brokerage, the automobile sector's weight increased to a 49-month high of 8 percent, up 50 bps MoM and 140 bps YoY in Jan’23. The sector now ranks third in mutual fund allocation – it was in the fifth position a year back, informed MOSL.
Meanwhile, the weight of capital goods space rose 30 bps MoM to 6.5 percent. Weights of consumer, metals and insurance sectors advanced 10 bps each on an MoM basis, it added.
Private banks, on the other hand, witnessed a moderation in its weights in January, after increasing to a 25-month high of 19 percent. It fell 30 bps to 18.7 percent in Jan. Despite the decline in weight, private banks remained the top sectoral holding for MFs in Jan, MOSL further informed.
It was followed by IT, Auto, NBFC and consumer sectors, highlighted the report.
PSU Banks’ weight also dipped 30 bps in Jan’23 to 3.8 percent, said MOSL. Apart from banks, NBFCs, Cement, Retail, Chemicals, Infrastructure, and Textiles also saw an MoM moderation., it mentioned
In terms of value, Autos, Technology, Capital Goods, Metals, Insurance, and Utilities witnessed an increase in value MoM. Meanwhile, PSU Banks, Infrastructure, and Retail saw a maximum decline, the brokerage revealed.
This was witnessed in the stocks as well. In terms of value increase MoM, six of the top-10 stocks were from the Auto and Technology domains: Tata Motors ( ₹2500 crore), Infosys ( ₹2310 crore), TCS ( ₹1960 crore), M&M ( ₹1790 crore), Maruti Suzuki ( ₹1420 crore), and Persistent Systems ( ₹1260 crore).
It further informed that the top sectors where MF ownership vis-à-vis the BSE 200 are at least 1 percent lower: Oil & Gas (20 funds under-owned), Consumer (19 funds under-owned), Technology (16 funds under-owned), NBFCs (13 funds under-owned), and Utilities (13 funds under-owned).
Meanwhile, the top sectors where MF ownership vis-à-vis the BSE 200 are at least 1 percent higher: Healthcare (16 funds over-owned), Capital Goods (15 funds over-owned), Automobiles (14 funds over-owned), Chemicals (14 funds over-owned), and PSU Banks (10 funds over-owned).
The Nifty ended 2.4 percent at 17,662 in January 2023 – the second consecutive month of a decline. Notably, with extreme volatility, the index ended 443 points lower. In Jan’23, DIIs reported the highest inflows since Jul’22 at $4.1 billion, meanwhile FIIs recorded the second consecutive month of outflows at $3.7 billion.
Equity AUM for domestic MFs (including ELSS and index funds) decreased 0.9 percent MoM to ₹16.5 lakh crore in Jan’23, led by a decline in market indices. Total AUM for the MF industry declined for the second consecutive month to ₹39.6 lakh crore (-0.7 percent MoM) in Jan’23, led by a decline in AUM for equities ( ₹14200 crore), other ETFs ( ₹10400 crore), income ( ₹7800 crore), and balanced ( ₹2500 crore) funds. Conversely, AUM for liquid funds increased by ₹4600 crore.
The number of systematic investment plans (SIPs) also saw a significant rise as the new SIPs which were added in the month of January were 22.65 lakh, while the number of SIPs discontinued/ matured stood at over 13.42 lakh, reporting a net increase of 9.23 lakh in just one month.
The value of SIPs also rose from ₹13,578 crore in December to ₹13,856 crore in January.