Equity AUM moderates as volatility spikes in January, slides 4.7% from September peak, says MOFSL

High market volatility, persisting global concerns and faltering returns in the near term dented investor sentiment.

As the Nifty 50 embarked on the fourth consecutive month in the red in January, roiled by high volatility, equity assets under management (AUMs) for domestic mutual funds fell 3.3 percent on month to Rs 32.3 lakh crore, a report by Motilal Oswal Financial Services showed. This also marks a 4.7 percent in equity AUMs from their peak in September.

Equity scheme sales fell 6.3 percent on month to Rs 76,200 crore in January, reflecting cautious investor sentiment. Meanwhile, domestic institutional investor (DII) inflows surged to $10 billion, while foreign institutional investor (FII) outflows stood at $8.4 billion—both marking their highest levels since October 2024.

The total equity value of the top 20 asset management companies (AMCs) declined 2.8 percent on month but remained 28.8 percent higher on year. In comparison, the Nifty 50 fell 0.6 percent on month but gained 8.2 percent on year, the MOFSL report stated. Among the top 10 mutual funds, Axis Mutual Fund recorded the steepest monthly decline at 5.7 percent, followed by DSP Mutual Fund at 4.3 percent, Mirae Asset Mutual Fund at 3.3 percent, Aditya Birla Sun Life Mutual Fund at 3.1 percent, and Kotak Mahindra Mutual Fund at 2.9 percent.

On the stock front, the highest month-on-month net buying in January was seen in Axis Bank (up 10 percent), Hindalco (up 7.8 percent), Adani Ports (up 5.8 percent), TCS (up 5.3 percent), and Trent (up 5.1 percent). Among midcaps, Hindustan Zinc, Godrej Properties, IDFC First Bank, Mazagon Dock, and Yes Bank saw the highest buying activity, while in smallcaps, Tanla Platforms, Happiest Minds, Mahanagar Gas, Aarti Industries, and Intellect Design emerged as favorites.

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Mutual funds increased their allocations to private banks, technology, automobiles, oil & gas, consumer, NBFCs, utilities, telecom, metals, cement, and insurance, lifting their sectoral weightage on month in January. Conversely, capital goods, healthcare, consumer durables, PSU banks, retail, and real estate saw reduced allocations. Private banks remained the dominant sectoral holding at 17.1 percent, followed by technology at 9.6 percent, automobiles at 8.4 percent, and healthcare at 7.5 percent. Cement, insurance, telecom, and oil & gas saw the highest increase in value on month, the report noted.

Meanwhile, another key observation highlighted in MOFSL's report was the divergent bets taken by mutual funds within the same sectors in January. The stocks with the highest increase in value on month in January included Maruti Suzuki, Bajaj Finance, Kotak Mahindra Bank, TCS, HUL, Reliance Industries, ONGC, Bharti Airtel, Coal India, and Axis Bank. In contrast, the biggest declines in value were seen in rival names like ITC, Zomato, HDFC Bank, Trent, Voltas, Kalyan Jewellers, Sun Pharma, SBI, Coforge, and HCL Tech.

Also Read | Smallcaps pull more retail money in January, gold ETFs shine bright, shows AMFI data

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