The declining outflow in equity and equity-oriented mutual funds in September (at Rs 734 crore) compared to August (Rs 4,000 crore) indicated that there could be further reduction in outflow in the coming months, but that did not happen in October. In fact, the outflow increased to Rs 2,725 crore in October - fourth consecutive month when mutual funds saw an outflow.
Market's continued upward journey and uncertainty over US presidential election could be reasons for October outflow.
"Broadly, as the markets made all-time high today investors are getting cautious and trying to reduce equity weightage. There is a feeling that markets are ahead of fundamentals and there could be some volatility in coming times, hence appetite for equities is low for now," Akhil Chaturvedi-Associate Director and Head of Sales and Distribution at Motilal Oswal Asset Management Company told Moneycontrol.
The market reported 3.5 percent gains in October and registered 53 percent rally from March 23's low point, while after the certainty in the US with Democratic Party's Joe Biden becoming US president elect, the FII inflow increased sharply in November (to over Rs 33,000 crore) and as a result the benchmark indices gained 10 percent in current month so far, taking the total gains to 68 percent from March 23's low.
"This is not the time to withdraw money from equities because macro conditions portend a new economic cycle, it is for the first time in many years we have seen a quarter where earnings are way ahead of consensus estimates and corporate performance has surprised on the upside," Aashish Somaiyaa, Chief Executive Officer at White Oak Capital said.
In largecap space, Bajaj Holdings & Investment, DLF, Godrej Consumer Products, Avenue Supermarts and Dr Reddy's Labs witnessed highest buying from asset management companies in October, while the highest selling was seen in Punjab National Bank, Bharti Infratel, Siemens, HDFC AMC and Wipro, said ICICI Direct.
Godrej Consumer Products and Bajaj Auto continued to be seen in top 10 buys list of mutual funds in September as well as in October, while Wipro was in top 10 buying list in September only.
Punjab National Bank, Bharti Infratel, Siemens, HDFC AMC, Bank of Baroda and SBI Card remained in the top 10 selling list in both months - September and October.
Among midcaps, the highest buying by mutual funds was seen in Sumitomo Chemical India, L&T Finance Holdings, Coforge, Vodafone Idea and CreditAccess Grameen, whereas Canara Bank, JSW Energy, BHEL, Shriram Transport Finance Company and IRCTC witnessed highest selling in October, said ICICI Direct.
Sumitomo Chemical India and L&T Technology Services remained in the top 10 buying list for both months (September and October), whereas Canara Bank, JSW Energy, BHEL, Shriram Transport Finance Company and IRCTC were also in top 10 selling list in September as well. Vodafone Idea was in the top 10 selling list in earlier months.
In the smallcap space, the brokerage said Graphite India, Just Dial, ABB Power Products & Systems India, Sandhar Technologies and Kalyani Steels saw highest buying by AMCs in October, however, Care Ratings, Thyrocare Technologies, DCM Shriram, BSE and Cochin Shipyard witnessed highest selling during the month.
Meanwhile, SIP inflows remained strong at Rs 7,800 crore in October compared to Rs 7,788 crore in September. "This is very encouraging from a retail flow perspective," G Pradeepkumar CEO Union AMC said.
The total net assets under management (AUM) in the mutual fund industry increased 5 percent in October to Rs 28.2 lakh crore, from Rs 26.86 lakh crore in previous month,Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.