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MOSL: FUND FOLIO (November 2018): Indian Mutual Fund Tracker — Shrugging off volatility, inflows in equities at eight-month high

FUND FOLIO (November 2018): Indian Mutual Fund Tracker — Shrugging off volatility, inflows in equities at eight-month high

 

Key observations

• The markets witnessed high volatility over the last two months. A cascade of tough news – both on the global and domestic front – unhinged what had been a smooth run since the beginning of the year. Despite this market angst, investors appeared to keep faith in mutual funds, with inflows remaining steady and the contribution of systematic investment plans (SIPs) touching an all-time of INR79.9b in October.
• Equity AUM of domestic MFs declined marginally by 0.4% MoM to INR8t in October, even as net inflows were the highest since Feb-18 (+31.4% MoM to INR148b).
• The fall in equity AUM can be ascribed to the market correction in October (Nifty down 5%). While equity scheme sales increased 5.7% MoM to INR289b, redemptions declined 12.3% MoM to INR142b.
• Total AUM of the MF industry increased marginally by 0.9% MoM to INR22.2t in October, primarily led by an increase in AUM of liquid funds (by INR597b) and gold ETFs (by INR2b). Other categories, however, witnessed an MoM decline in AUM.
• Equity AUM, as a percentage of India’s market capitalization, is at an all-time high of 5.8% (+90bp 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, PSU Banks, Utilities, NBFCs, Capital Goods and Retail increased, while those of Oil & Gas, Autos, Technology, Metals, Consumer, Cement and Healthcare moderated.
• Private Banks’ weight rose to a 13-month high of 16.8% (+70bp MoM). Auto’s weight reached a new low of 8.1% (-40bp MoM/-160bp YoY). As a result, the sector moved down to the fourth position in terms of allocation of mutual funds – it was at the second position 12 months ago.
• Of the top 10 stocks in terms of value increase MoM, six were from Financials. ICICI Bank (+68.4b), SBI (+36.4b), Axis Bank (+20.3b), HDFC (+19.2b), Bajaj Finance (+11.9b) and BOB (+6.6b) saw a maximum increase in value.
• Coal India was one of the preferred stocks among MFs in the month, with net buying by 14 funds. Value increased by INR20.5b, despite the stock remaining flat during the month.