The first month of FY19-20 saw a notable change in the sector and stock allocation from the mutual fund industry.
On a month-on-month basis, the weight of technology, cement, healthcare, private banks and capital goods increased, while that of PSU banks, utilities, NBFCs, oil & gas, autos, chemicals and infrastructure moderated.
MFs were net buyers in 44 percent of the Nifty stocks.
Private Banks — top sector holding of MFs — saw their weight increase for the seventh successive month, to climb to a new high of 19.3 percent, an increase of 10 basis points MoM 390 bps YoY.
This was followed by technology with 9.1 percent weight, NBFCs (8.7 percent) and Oil & Gas (7.9 percent).
According to a report from Motilal Oswal Financial Services titled 'MF tracker', HDFC Bank was one of the preferred stocks among MFs in the month, with net buying by 16 funds. Value increased by Rs 8.6 billion, despite the stock remaining unchanged MoM.
The maximum MoM change in value was seen in TCS, ICICI Bank and Kotak Mahindra Bank.
In April, the auto weight in fund holdings reached a new low of 6.3 percent, a drop of 10 bps in MoM and 3.4 percent YoY. As a result, the sector is down to the seventh position in terms of mutual fund allocation – it was in the second position 12 months ago.
Post an impressive finish to FY19 where the Nifty rallied 7.7 percent in March 2019 and after a gap of eight months, the market charted a new lifetime high of 11,856 in April. However, it ended flattish with marginal gains of 1 percent in the month.
Net inflows moderated in April, as nervousness gripped markets owing to credit events, rating downgrades, global trade war tensions and uncertainty over the outcome of the 2019 general elections.
Equity inflows (including ELSS and Arbitrage) saw slowdown with net inflows of Rs 58 billion in April 2019, as against Rs 78 billion recorded in March 2019.
However, April flows cannot be compared to the previous month, as reported data is in the new format prescribed by the Sebi with focus on regrouped and reclassified schemes.
Equity mutual funds attracted steady flows, largely due to investor participation through systematic investment plans (SIPs). Total amount garnered through SIPs stood at Rs 82.4 billion in April 2019 registering an increase of 2.3 percent MoM and YoY rise of 23.1 percent.
The mutual fund industry’s total AUM increased 4.2 percent on month to Rs 24.8 trillion.