In the past eighteen months, Indian equity markets have attracted investors in hoards as a result of which the inflows in financial markets increase manifold. Like stock markets which touched record highs in October, inflows in mutual funds are witnessing an upward trajectory and the slew of IPOs in the recent past have garnered investors' fancy like never before.
This is indicative of the fact that an average Indian who was averse to the risk till recently and used to consider FD as the safest bet for capital growth, is now willing to venture into other lucrative but more risky options like mutual funds and direct equity.
Betting on mutual funds
The mutual fund industry witnessed 21 percent month-on-month (MoM) growth in net inflows in November 2021. The net inflows in November were Rs 46,165 crore compared to Rs 38,275 crore in October 2021.
Income and Debt-oriented schemes garnered the highest share of net inflows in November 2021 at Rs 14,900 crore compared to Rs 11,902 crore in the previous month, a MoM growth of 20 percent, said a report from IDBI Capital.
SIPs were the second preference of investors which managed a net inflow of Rs 11,005 crore in November compared to Rs 10,519 in October
Growth/equity-oriented schemes came in close third and mopped up inflows of Rs 10,687 crore compared to Rs 5,079 crore in the previous month.
Hybrid schemes lost a bit of investor favour in November as they saw net inflows of Rs 9,422 crore compared to Rs 10,437 crore in October.
Other ETFs (excluding gold) garnered Rs 6,483 crore worth of net inflows while the inflows in Gold ETF stood at Rs 682 crore. The inflow for October in these two schemes stood at Rs 5,427 crore and Rs 304 crore, respectively.
Fund of funds (FOF) investing overseas saw a huge MoM decline of 78 percent as the inflows dropped to Rs 338 crore compared to Rs 1,514 crore in the previous month.
DIIs & FIIs
Domestic mutual funds were net equity buyers in November 2021 and invested an amount of Rs 24,121 crore as against Rs 5,865 crore in invested in October 2021, IDBI Capital report added.
FIIs, on the other hand, were net sellers in equities in November 2021 shelling about Rs 5,710 crore as against Rs 17,034 crore sold in October 2021.
Newly listed companies
The IPO frenzy witnessed recently has resulted in a bunch of new companies taking the route of primary markets to raise capital and get listed. Some of these are new-age companies, some operate in niche segments while some have very strong fundamentals.
“Mutual Funds deployed Rs 4,050 crore in Fresh issuances in Nov’21,” said a report from Edelweiss Research. The mutual funds lapped up PB Fintech, which saw the highest mutual fund investment amongst newly listed companies at Rs 1,350 crore. Paytm (One97 Communications) came out with the largest IPO in the history of Indian markets and mutual funds have invested Rs 980 crore in this company. Go Fashion managed to attract Rs 660 crore, Latent View Analytics Rs 570 crore, SJS Enterprises Rs 200 crore, Tarsons Products Rs 180 crore and mutual funds invested Rs 110 crore in Sapphire Foods.
PB Fintech got investments from 15 of the top 20 mutual funds with major contributions coming from Axis MF which invested Rs 243 crore in the company, ABSL invested Rs 152 crore and Kotak MF 138 crore.
Paytm saw major investments coming in from Aditya Birla Sunlife Mutual Funds (ABSL) amounting to Rs 470 crore, Rs 374 crore from Mirae mutual fund and Rs 127 crore from HDFC mutual fund.
Existing listed companies – large caps
The existing lot of large caps which evinced major interest from mutual funds were Axis Bank which saw 55.3 million of its shares being bought by them in the month of November 2021 amounting to Rs 3,626 crore. ICICI Bank saw an additional 43.7 million shares amounting to Rs 3,118 crore being bought by mutual funds. HDFC Bank was next in line with Rs 1,404 crore coming into it from mutual funds. “Funds also added HCL Technologies, Infosys, M&M, and IndusInd Bank,” said Edelweiss.
On the other hand, Vedanta, Zomato and Apollo Hospitals were the top three companies which lost the favour of mutual funds in November 2021 as they sold Rs 2,722 crore, Rs 630 crore and Rs 604 crore respectively, in these companies.
Existing listed companies – midcaps
Mutual funds added Zee Ent and invested Rs 770 crore in the media company, IPCA Labs saw an investment of Rs 550 crore, Indiabulls Housing Finance Rs 500 crore and APL Apollo Rs 350 crore.
Key reductions in this segment were Indian Energy Exchange, Aarti Industries, Escorts and Tata Chemicals, added the brokerage firm Edelweiss.
Existing listed companies - small caps
Among the small caps Zensar Tech, Kalpataru Power, Granules India and Thangamayil Jew were accumulated while key reductions were eClerx, Elgi Equipment and Sobha Ltd.
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