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Last Updated : Aug 13, 2020 04:53 PM IST | Source: Moneycontrol.com

Mutual funds bought 10 stocks and exited 9 in July, do you own any?

MFs also bought Rights Entitlement shares of Arvind Fashions, Gateway Distriparks and PVR in July.

Sunil Shankar Matkar

Equity funds in July witnessed an outflow for the first time in more than four years, with outflow in equity cash segment doubling compared to June.

The inflow into equity funds has been declining for five consecutive months. In July, mutual fund houses sold Rs 2,480 crore in equity schemes against an inflow of Rs 240 crore in June. The outflow in the cash segment was Rs 7,231.99 crore in July against Rs 3,689.67 crore in the previous month.

The big reason was profit booking and redemption pressure as the market rallied 50 percent from March lows, though FIIs were net buyers in July (Rs 2,490.19 crore) and June (Rs 5,492.95 crore).

"With a sudden rally in the market post COVID-19, investors have rushed to book profits which led to such high redemptions in the equity mutual funds," Narnolia said.


Joseph Thomas, Head of Research at Emkay Wealth Management, said the outflow may stabilise over the next few months. "While we may see the current trend continuing in the shorter term, the course may be steadied on the availability of more macro data in the coming months."

ALSO READ: Equity mutual funds see first monthly net outflow in 4 years; what lies ahead?

In July, mutual funds picked 10 fresh stocks, including Borosil, Hester Biosciences, Hindustan Foods, Novartis India, PTC India Financial Services, Shivalik Rasayan and Stylam Industries, Dolat Capital said. These are all smallcaps.

They also bought Rights Entitlement shares of Arvind Fashions, Gateway Distriparks and PVR in July.

MFs also exited nine stocks in the month gone by. These are Aarti Surfactants, Bhageria Industries, Borosil Renewables, Clariant Chemicals (India), Consolidated Construction Consortium, Dhampur Sugar Mills, Flora Textiles, Geojit Financial Services and Monte Carlo Fashions, said Dolat Capital.


In the Nifty50 space, Adani Ports, Bajaj Finserv, Cipla, Dr Reddy's Labs, Infosys, SBI, Sun Pharma and TCS maximum saw maximum buying by mutual funds in July, Dolat Capital said.

However, higher selling was seen in Asian Paints, Axis Bank, Bajaj Auto, Bajaj Finance, Bharti Infratel, GAIL, HDFC Bank, HDFC, HUL, Hero MotoCorp, Maruti Suzuki, NTPC, Reliance Industries and Titan Company, the brokerage added.

Systematic investment plan (SIP) inflows, too, have been dropping for the past many months, though inflow remained strong at Rs 7,830 crore in July against Rs 7,927 crore in June.

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"The SIP has also been badly impacted in the current pandemic due to restricted cash flows for a number of households. Flows have succumbed to job loss pressures and poor market outlook and clarity," said Narnolia.

But the flow into debt funds was strong at Rs 91,391 crore and most of these have been into funds with a short duration.

"Short duration funds, corporate bond funds, and banking and PSU funds continue to attract investor attention due to the hunt for superior risk-adjusted returns, as these funds have the most appropriate duration positioning and excellent credit risk profile," Thomas said.

"It is very clear that investors are avoiding longer duration probably due to the expectation that there is volatility at the long end of the curve emanating from the issue of long-dated papers at the Gilts' primary auctions."

FIIs remained net buyers in equities, acquiring Rs 8,590.13 crore of shares in July but they redeemed debts worth Rs 1,833.40 crore.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are his own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

First Published on Aug 13, 2020 12:34 pm