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Equity inflows hold steady in volatile times, hit seven-month high
* June was a month of wild swings for the market. After the Nifty surpassed the 12,000 mark to hit a record high at the beginning of the month, the election outcome-driven euphoria fizzled out with investors waking up to the ground realities – slowdown in the economy, concerns around liquidity woes for NBFCs, and a moderation in consumption on the domestic front, among others. Throughout the month thereafter, the benchmark consolidated in the 11,500-12,000 range, in keeping with the volatile trend of the last two months.
* Even as the markets continued to seesaw, investors continued to park money in mutual funds, with inflows remaining steady and the contribution of systematic investment plans (SIPs) remaining stable at INR81.2b in Jun’19.
* Domestic MF industry’s average AUM increased for the second consecutive quarter in 1QFY20 (+4.2% QoQ) to touch a new high of INR25.6t. In Jun’19, average AUM increased by 9% YoY (INR2.1t), primarily on account of inflows in equity and ETFs.
* Inflows in equity schemes (including ELSS and arbitrage) increased from INR97b in the previous month to INR107b in June’19 – the highest since Nov’18 – led by a decline in redemptions (-21% MoM at INR142b), even as gross sales were down 10% MoM to INR250b.
Some interesting facts
* The month saw a notable change in sector and stock allocation of funds. On an MoM basis, the weight of Private Banks, Consumer, Utilities, Technology, NBFCs, Retail, Metals and PSU Banks increased, while that of Oil & Gas, Chemicals, Autos and Cement moderated.
* Private Banks – the top sector holding of MFs – saw its weightage AUM touches new high - surged by staggering 2.6x in past five years increase for the ninth successive month to a new high of 19.9% (+20bp MoM, +370bp YoY).
* In terms of value increase MoM, six of the top 10 stocks were from Financials in Jun’19: ICICI Bank (+INR19.4b), HDFC Bank (+INR13.2b), Shriram Transport Fin (+INR10.7b), SBI (+INR9.5b), Bajaj Finance (+INR9.3b) and HDFC (+INR7.9b).
* NTPC saw value increase of INR12.6b in Jun’19, as the stock was up 6%. Notably, the stock saw net buying by 16 of the top-20 funds.
* In terms of value decrease MoM, five of the top 10 stocks were from Oil & Gas. Reliance Inds (-INR17.5b), GAIL (-INR12.7b), Yes Bank (-INR10.2b), HPCL (-INR8.7b) and UPL (-INR7.4b) witnessed the maximum decline in value on an MoM basis.
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