HDFC, L&T, Vedanta, Maruti Suzuki, and ICICI Bank, among others have seen interest from fund managers in April.
The S&P BSE Sensex rose just about 1 percent in April, but the total assets under management (AUMs) of the domestic mutual fund industry increased by 9.8 percent (1.7 Lakh crore) to Rs 19.26 lakh crore.
The Indian market is hitting record highs since the last two months, which could be largely attributed to the increased flows from domestic institutional investors (DIIs). Investors poured over Rs 9,000 crore into Indian equity markets, while foreign institutional investors (FIIs) sold over Rs 2,000 crore in the same period.
Fund managers have been gung-ho on sectors like banks, autos, power, and cement. Top 20 stocks which fund managers added in April include names like HDFC, L&T, Vedanta, Maruti Suzuki, ICICI Bank, GAIL India, Max Financial Services, IOC, Federal Bank, Power Grid, UPL, Tata Motors etc. among others.
Market valuations might look stretched, but flows into mutual funds via systematic investment plans (SIPs) are likely to continue, suggest experts. Even if there is a big dip, there is large possibility that it will be bought into.
“The domestic liquidity is coming with maturity. On one hand, flows from systematic investment plans (SIPs) will continue but lump sum flows from high net worth individual investors might wait for a correction to invest more into equity markets,” Nilesh Shah, MD, Kotak AMC said in an interview with CNBC-TV18.
On a MoM basis, AUM of 07 categories witnessed rise which include Balanced, ELSS, Equity. Income, Infrastructure Debt, Other ETF’s & Liquid Fund while 3 categories witnessed fall which includes FOF Overseas, GILT, Gold ETF’s.
Domestic mutual funds turned out to be net buyers in equity in April 2017. Mutual funds were net buyers of equities in 18 trading session worth Rs 11,244 crore, as against net buying of Rs 2,368 crore in March 2017, IDBI Capital said in a report.
In April mutual funds were net buyers in equity in 17 trading sessions and net sellers in 1 sessions. Net buying in equity was recorded highest at Rs 1,326.7 Cr on 28 April 2017 while net selling recorded at Rs 476.6 Cr on 05 April 2017.
The AUM of Equity Fund increased by 4.7 percent (by Rs 22,883 crore) to Rs 5.05 Lakh crore in April 2017 over March 2017.
The assets of ELSS increased by 3.9 percent by Rs 2,396 crore to Rs 63,799 crore, meanwhile Equity Fund registered net inflow of Rs 8,842 crore and ELSS Fund saw a net inflow of Rs 587 crore. Thus, total equity funds witnessed net inflow of Rs 7,723 crore.
The flow of funds into equity-linked schemes will only increase in near future as relative attractiveness of other asset classes fade. The rally has only started for Indian equity markets as the risk component (political, macro as well as a market) has reduced considerably which is positive for a bullish momentum to continue.
“One big reason for such optimism is flows of domestic saving into equity markets. We experts $100 billion of household saving to flow into Indian equity markets, although some market participants might doubt that figure,” Porinju Veliyath, Equity Intelligence India said in an interview with CNBC-TV18.The ace investor, known for spotting small and midcap stocks at the right time and right price, said that Indian investors are staring at a golden opportunity of stocks picking which can continue for 3-5 years.