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The equity markets continued its upward journey in December with benchmark indices hitting fresh record highs driven by consistent Foreign Institutional Investor (FII) inflow. Among emerging markets, Indian equities received the highest inflow (over Rs 1.6 lakh crore) from foreign investors in 2020. However, mutual funds continued to book profits as they were net sellers for the sixth consecutive month in December.
Equity and equity-oriented schemes witnessed net outflow at Rs 10,147 crore in December, taking the total cumulative outflow Rs 33,057 crore in second half of CY 2020.
"Investors in mutual funds have been using this market rally as an opportunity to book profits and therefore the industry has witnessed absolute redemptions of Rs 36,000 crore (Rs 26,000 crore for November 2020). Adjusted for inflows the net negative sales is about Rs 10,000 crore," Akhil Chaturvedi, Associate Director & Head of Sales at Motilal Oswal Asset Management Company said.
"Re-allocation of large part of these redemptions would be in direct equities where the experience of investors have been good in recent past. This along with the demand for IPO’s and real estate would also have sucked up the liquidity," he added.
Mutual funds completely exited 21 stocks in the month of December including seven gold exchange traded funds (ETFs). These include Axis Gold ETF, Birla Sun Life Gold ETF - Growth, HDFC Gold Exchange Traded Fund, Kotak Gold Exchange Traded Fund, SBI Gold Exchange Traded Scheme - Growth and UTI Mutual Fund - UTI Gold Exchange Traded Fund were the seven ETFs.
Interesting, November saw fresh buying from MFs in six of the aforementioned seven ETFs - Axis Gold ETF, Birla Sun Life Gold ETF, HDFC Gold ETF, Kotak Gold ETF, SBI Gold ETF and UTI Gold ETF.
Among stocks, MFs completely exited ADF Foods, Balaji Telefilms, Bodal Chemicals, Infibeam Avenues, Jindal Drilling & Industries, Kirloskar Industries, Mahindra EPC Irrigation, PC Jeweller and Parag Milk Foods, said Dolat Capital.
Meanwhile, mutual funds made a fresh entry into eight stocks during December. These include Antony Waste Handling Cell, Borosil Renewables, Burger King India, Fineotex Chemical, Mrs Bectors Foods Specialities, Responsive Industries, Tanla Platforms and Xelpmoc Design.
Antony Waste Handling Cell, Burger King India, Fineotex Chemical and Mrs Bectors Foods Specialities had launched their IPOs in December last year.
In December, all the equity & equity-oriented mutual funds except dividend yield funds and sectoral funds witnessed outflows. Largecap funds witnessed the highest redemption at Rs 3,876 crore followed by multicap funds at Rs 3,540 crore.
"Multicap have continued seeing net outflows in the past couple of months owing to change in SEBI guidelines for the category. The newly added category of Flexi Cap will help in easing the outflows as investors will have a beer understanding of the category now," said Narnolia Financial Services.
But the contribution through Systematic Investment Plans has risen sharply in December last year at Rs 8,418 crore, compared to Rs 7,302 crore inflow in the previous month.
In the Nifty50 space, highest buying by mutual funds was seen in Axis Bank, Bajaj Finserv, Eicher Motors, Grasim Industries, IndusInd Bank, Sun Pharma, TCS and Tech Mahindra, said Dolat Capital.
On the other hand, highest-selling by MFs was seen in Adani Ports, Asian Paints, Bajaj Finance, BPCL, Cipla, Coal India, GAIL, HDFC Bank, HDFC Life and Titan Company, the brokerage added.
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