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Last Updated : Jul 24, 2019 12:41 PM IST | Source: Moneycontrol.com

Largecaps top AMC's shopping list in 2019; midcap, smallcap stocks see selling

Nine AMCs have increased their holdings in largecaps in 2019, while five reduced their holdings in smallcaps. Moreover, seven of the top 10 AMCs have reduced their holdings in midcaps YTD

Suyash Maheshwari @Suyashm9
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Largecap stocks have been the preferred pick of the top 10 asset management companies in 2019 as assets under management in largecaps increased 2.9 percent so far this year.

In comparison, equity assets under management (AUM) in 2019 reduced 0.64 percent and 7.36 percent, respectively, in midcap and smallcap stocks.

According to the AMFI data, nine asset management companies (AMCs) have increased their holdings in largecaps in 2019, while five reduced their holdings in smallcaps. Moreover, seven of the top 10 AMCs have reduced their holdings in midcaps YTD.

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Analysts see further upside in largecap stocks in the near future as India takes on the colossal task to become a $5 trillion economy.

"I do not see mid and small-cap companies going up in the near future. The largecap space will be the primary beneficiary of the economic recovery. I see that there will be an up-move in largecaps first. Midcaps should follow them later. Smallcaps will rally at a much later stage," Shyam Sekhar, founder and chief ideator at Chennai-based iThought told Moneycontrol.

While largecaps have seen steady inflows from AMCs, their equity exposure has increased only 0.38 percent month-on-month during June 2019.

aum

(Source: HDFC Securities)

Mid and smallcap stocks saw selling as seven of the top 10 AMCs decreased their holdings in June from May 2019, as multiple downgrades along with domestic and global turbulence dampened investor sentiments.

Largecap stocks, on the other hand, continued to provide some value during the month as five of the top 10 AMCs increased their holdings across the scheme.

Largecap stocks such as TCS, HDFC Ltd, HDFC Bank, IndusInd Bank, ITC, Tech Mahindra, HUL, Kotak Mahindra Bank, HCL Tech and Axis Bank were the top picks in June for both fund houses and retail investors.

Among small and midcaps, Emami, Shriram Transport Finance, Divi's Laboratories, Godrej Properties, Vaibhav Global, MindTree, Gruh Finance, Aster DM Healthcare, Glenmark Pharma, Sobha Ltd were investors' top picks.

While the equity exposure of AMCs was limited in June, inflows in equity schemes rose 41 percent MoM from Rs 5,408 crore in May 2019 to Rs 7,663 crore as political stability coupled with easing stance of the central bank boosted the retail investor’s sentiments.

AUM-1

(Source: HDFC Securities)

For the quarter ended June 2019, fund houses increased their focus in sectors such as banks, finance, software, consumer non-durables among others.

Bank stocks attracted the highest investment from AMCs with a Rs 15,605 crore influx during the quarter, while finance and software accumulated Rs 5,070 crore and Rs 1,779 crore, respectively.

AUUUUMMM

(Source: HDFC Securities)

HDFC BankICICI BankSBI, Infosys and Larsen & Tubro from the largecap space saw the highest flow from AMCs in Q1FY20. Meanwhile, City Union Bank, RBL Bank, Federal Bank and Voltas were the top pick for AMCs from mid and smallcap space in the June quarter.

In comparison to equity, debt funds that had positive inflows in May 2019 turned negative in June.

According to HDFC Securities, outflows from debt funds were mainly due to the payment needs of institutions at quarter end. However, going forward, liquid schemes could see some moderation in inflows following the new SEBI regulations.

"We might see some institutional investors switch to overnight funds. The recent credit default events have taken a toll on credit risk funds, which saw net outflows of Rs 8,104 crore during period Apr-Jun 2019 (including outflow of Rs 2,695 crore in June 2019)," said the brokerage.

Also, the month-end AUM of Indian mutual fund industry fell 6.5 percent in June 2019 to Rs 2,425,040 crore versus Rs 2,593,560 crore as seen in May 2019. The decrease in overall AUM is mainly attributed to increased outflows in almost all debt funds aggregating to Rs 171,349 crore which is usually seen in the quarter-end phenomenon, said HDFC Securities.

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First Published on Jul 23, 2019 08:46 pm
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