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MOSL: Morning India (14/June/19): 1. Fund Folio (MF industry AUM hits new record high); 2. Hindustan Unilever (Takeaways from call on IND-AS 116 impact); 3. Persistent Systems (Building blocks towards the elusi

MOrning India (14/June/19): 1. Fund Folio (MF industry AUM hits new record high); 2. Hindustan Unilever (Takeaways from call on IND-AS 116 impact); 3. Persistent Systems (Building blocks towards the elusive cross-sell)

 

Today’s top research theme

Fund Folio: MF industry AUM hits new record high; Inching towards INR26t mark

• With positive momentum of the last two months intact, the domestic mutual funds (MF) industry created a new record in May'19 - total AUM hit the INR25.9t (+4.6% MoM) mark, surpassing the previous high of INR25.2t in Aug'18. Notably, the MF industry's AUM has surged a staggering 3.9x in the past 10 years (INR6.6t in May'09).
• The MoM increase can be primarily attributed to a rise in AUM of income/debt, equity and ETF-oriented schemes.
• Equity AUM (including ELSS and Arbitrage) increased 3.2% MoM to INR8.2t in May, led by a rise in market indices (Nifty up 1.5% MoM). While equity scheme sales were up 21% MoM to INR278b, redemptions increased marginally by 5% MoM to INR180b. Consequently, net inflows were up 69% MoM to INR97b in May.
• The month saw a notable change in sector and stock allocation of funds. Weight of Domestic Cyclicals' increased 160bp to 10-month high of 62.9%, as weight of Capital Goods, Financials and Cement increased while that of Autos moderated.
• Private Banks - the top sector holding of MFs - saw its weightage increase for the eighth successive month to climb to a new high of 19.7% (+40bp MoM, +330bp YoY).

 

Piping hot news

OPEC cuts 2019 oil demand growth forecast, sees more downside risks

• The Organisation of Petroleum Exporting Countries (OPEC) has cut its forecast for global oil demand growth and warned of further potential cuts as international trade disputes continue to fester, building a case for prolonged supply restraint over the rest of 2019. The oil producer group and its allies meet in the coming weeks to decide whether to maintain supply curbs, with some having become alarmed by a steep slide in prices, despite United States (US) President Donald Trump pressing for action to lower prices.