The inflow into equity schemes turned stronger in May 2021, as compared to April, thanks to the consistent fall in new COVID cases, beginning in the second half of May.
The drop in active cases, inducing states to ease lockdown restrictions, has raised hopes for faster economic recovery in the coming quarters.
Healthy March quarter earnings and strong foreign institutional investors (FII) flow also aided to the good sentiment.
As a result, the market too had a strong run with the Nifty50 as well as Nifty Midcap 100 index hitting fresh record high towards end of May, with the trend continuing in June so far.
The benchmark index as well as Nifty Midcap gained 6.5 percent each in May 2021 as new COVID cases on a daily basis dropped from the 4-lakh mark to over 60,000 now.
Inflows into equity funds continued for a third consecutive month, coming substantially higher in May at Rs 10,083 crore (the highest since March 2020), compared to Rs 3,400 crore in April.
Systematic Investment Plan (SIP) flows in May, too, were an improvement at Rs 8,800 crore compared to Rs 8,600 crore in the previous month.
"Equity assets under management (AUM - including ELSS OR Equity Linked Savings Scheme and index funds) of domestic mutual funds (MFs) increased 7.7 percent month-on-month to Rs 11.1 lakh crore in May 2021. This was on account of a rise in market indices (Nifty up 6.5 percent month-on-month (MoM) and an increase in equity scheme sales (up 15 percent MoM to Rs 27,700 crore). Furthermore, redemptions decreased 18.6 percent MoM to Rs 17,200 crore. This led to an increase in net inflows in May 2021," said Motilal Oswal.
Pointed out Akhil Chaturvedi, Head of Sales and Distribution at Motilal Oswal Asset Management Company: "Broadly, we understand from the first wave of COVID that these waves will be short lived and eventually economic activities will revive, boosting market sentiments. Therefore, buying on dips always makes sense and it is reflected in the mutual funds sales numbers quite positively."
The assets under management for the mutual fund industry, as on May 2021, increased to Rs 33.05 lakh crore compared to Rs 32.37 lakh crore as on April 2021, partly due to rising stock prices.
ICICI Direct collated a list of 10 stocks each from large caps, midcaps, and small caps categories, which saw highest buying and selling in May.
Among large caps, the highest buying by asset management companies (AMCs) was seen in Punjab National Bank, SBI Life Insurance Company, Indus Towers, Hero MotoCorp, and Bajaj Holdings & Investment.
However, Hindustan Zinc, Britannia Industries, Colgate-Palmolive (India), Tata Steel and Godrej Consumer Products witnessed the highest selling by mutual funds.
In April, public sector undertaking (PSU) lender, Punjab National Bank, was also seen at the top in the buying list of AMCs in April too, as was Bajaj Holdings, which figured in the top 10 buying list.
In the midcap space, mutual funds made the highest buying in Zee Entertainment Enterprises, Jubilant Pharmova, Godrej Industries, Coforge, and L&T Finance Holdings, whereas the highest selling by AMCs was seen in GMR Infrastructure, IIFL Wealth Management, JSW Energy, ICICI Securities, and General Insurance Corporation of India.
In April, L&T Finance Holdings was in the buying list of AMCs, while GMR Infrastructure was at the top in the selling list among midcaps.
Among small caps, the highest buying by AMCs was seen in TCNS Clothing, TV18 Broadcast, Magma Fincorp, Sundaram Finance Holdings, and Solara Active Pharma Science.
However, Gufic Biosciences, Sterling and Wilson Solar, Praj Industries, Shilpa Medicare, and Happiest Minds Technologies witnessed maximum sales by mutual funds.
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