The consistent flow through systematic investment plans continue to support equity mutual funds
The equity asset value of top 20 mutual funds dropped 1.6 percent month-on-month (MoM) to Rs 8.3 lakh crore in January, thanks to the fall in the stock market for the second consecutive month. In comparison, Nifty declined 0.3 percent in January, and 0.13 percent in December 2018.
Assets under management (AUM) of domestic equity MFs increased 4 percent in November 2018 and 1.6 percent in December 2018.
The total AUM of the MF industry, however, rose 2.2 percent MoM to Rs 23.4 lakh crore in January, primarily due to increase in AUM of liquid funds and income funds.
The mutual fund houses in January also saw the lowest monthly gross inflows since April 2017, but net inflows increased MoM due to decline in redemptions.
"Mutual funds' gross inflows declined to Rs 20,900 crore or 4.6 percent MoM in January, while redemptions declined to Rs 15,800 crore (down 9.5 percent MoM), leading to a 14.4 percent increase in net inflows to Rs 5,100 crore in the month from Rs 4,400 crore in December 2018," Motilal Oswal said.
The consistent flow through systematic investment plans continued to support equity mutual funds.
"Equity mutual funds attracted steady flows, largely due to investor participation through systematic investment plans (SIPs). Total amount garnered through SIPs stood at Rs 8,060 crore in January (up 21 percent YoY and up 2x in two years)," the research house said.
The month saw a notable change in the sector and stock allocation of funds. Mutual funds increased their weightage in technology, private banks, consumer, oil and gas and healthcare; meanwhile decreased in automobiles, NBFCs, capital goods, utilities, cement, metals, infrastructure, media and telecom in January, compared to December 2018.
Technology sector's weightage reached 32-month high of 9.5 percent (+90bp MoM, +270bp YoY). "As a result, the sector overtook NBFCs to take the second position in the sector allocation of mutual funds – it was at the fifth position about 12 months ago," Motilal Oswal said.
Private banks — the top sector holding of MFs — saw its weightage increase for four successive months to climb to a new high of 18.5 percent (+100bp MoM,+200bp YoY) and auto's weightage reached a new low of 7 percent (-70bp MoM/-240bp YoY), it added.
Among the stocks in which MFs increased their holdings the most, six were from technology and private banks sectors.
Among the stocks in which MFs decreased their holdings most, four were from auto sector.
"Infosys, Axis Bank, Reliance Industries, ICICI Bank and TCS saw the maximum value change MoM, while L&T, Maruti Suzuki, M&M, Coal India and ONGC saw the maximum decline in value," the research house said.During the month, MFs were net buyers in 56 percent of the total stocks they hold. Highest net buying on MoM basis was witnessed in JSW Steel, Asian Paints, Grasim, Hindalco, Axis Bank, Adani Ports, HUL, ICICI Bank, Infosys and HDFC Bank.