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MOSL: FUND FOLIO (December 2018)-Indian Mutual Fund Tracker — Back into momentum, Domestic Cyclicals take centre stage

FUND FOLIO (December 2018): Indian Mutual Fund Tracker — Back into momentum, Domestic Cyclicals take centre stage

 

Key observations

• Domestic mutual funds (MFs) appeared to recover the lost ground after two months in Nov’18. Equity AUM of the mutual fund industry increased 4% MoM to INR8.3t in the month.
• The increase in equity AUM can be primarily attributed to the rise in the market indices (Nifty up 4.7% MoM). The impact of lower equity scheme sales (-27.6% MoM to INR210b) was partially mitigated by a slowdown in redemptions (-28.1% MoM to INR102b – lowest in 23 months), leading to net inflows of INR108b (v/s INR148b in October).
• Total AUM of the MF industry increased by 8.1% MoM to INR24t in Nov’18, primarily led by a rise in AUM of liquid funds (by INR1,391b), equity funds (by INR316b) and other ETFs (INR53b).
• Notably, equity AUM, as a percentage of India’s market capitalization, is at an all-time high of 5.8% (+80bp YoY).

 

Some interesting facts

• The month saw a notable change in sector and stock allocation of funds. On an MoM basis, the weights of Private Banks, Capital Goods, NBFCs, Consumer, Retail, Oil and Cement increased, while those of Healthcare, Technology, Metals, Utilities, Textiles, PSU Banks and Autos moderated.
• Domestic Cyclicals’ weight rose 110bp MoM to 61.8%, mainly led by Private Financials and Capital Goods. Over the last two months, the weight of Private Banks increased sharply by 130bp to 17.4%. As a result, the sector weights are near all-time high of 17.7%.
• Defensives’ weight fell to a 4-month low of 27.8% (-100bp MoM), led by Healthcare (-50bp), Technology (-40bp) and Utilities (-30bp). On the other hand, Consumer sector’s weight climbed 20bp MoM to touch a new high of 7.9%.
• Of the top-10 stocks in terms of value increase MoM, five were from Private Financials: HDFC Bank (+INR53.4b), Axis Bank (+INR25.5b), HDFC (+INR18.5b), Kotak Mahindra Bank (+INR12.6b) and ICICI Bank (+INR10.0b).
• ICICI Bank was one of the preferred stocks among MFs in the month, with net buying by 17 funds. Value increased by INR10b, despite the stock remaining flat during the month.
• Three of the top 10 stocks that saw a maximum decline in value were from Healthcare. Sun Pharma (-INR17.2b), Divis Lab (-INR6.9b) and Cipla (-INR5.8b).