Key observations

The Nifty, after three consecutive months of decline, bounced back smartly in Jul’22 with 8.7% MoM gain – the highest since Dec’20. The Nifty Midcap 100 (+12% MoM) outperformed the markets during the month. FIIs registered inflows of USD0.8b in Jul’22 after nine months of outflows totaling USD33.3b; YTD’CY22 outflows stood at USD25.4b. Domestic inflows decelerated to USD1.3b in Jul’22; YTD’CY22 inflows stood at USD27.6b

After declining for two consecutive months, equity AUM (including ELSS and index funds) of domestic MFs reached new highs of INR15.2t (+10.3% MoM) in Jul’22 as markets rebounded after three months of decline. Notably, the month saw a decline in sales of equity schemes (down 14.3% MoM to INR304b). The pace of redemptions picked up to INR148b (up 16% MoM). Consequently, net inflows slowed to INR157b in Jul’22 from INR228b in Jun’22.

Total AUM for the MF industry increased to INR37.7t (5.9% MoM) in Jul’22 – primarily led by a rise in AUM for equities (INR1,412b), other ETFs (INR380b), balanced (INR210b), and income (INR179b) funds . Contributions in systematic investment plans (SIPs) remained strong at INR121.4b in Jul’22 – an eleventh consecutive month of INR100b plus investment in the category

Some interesting facts

The month saw notable changes in the sector and stock allocation of funds. On a MoM basis, the weights of NBFCs, Private Banks, Consumer, Retail, Automobiles, Capital Goods, PSU Banks, Metals, Cement, and Media increased, while the weights of Oil & Gas, Technology, Telecom, Healthcare, and Utilities moderated.

* NBFCs’ weight – after hitting a six-month low in Jun’22 to 7.3% – saw positive interest among MFs, with an increase in weight to 7.7% (+40bp MoM, +30bp YoY) in Jul’22

* Private Banks’ weight after moderating in Jun’22, climbed to 17.9% (+40bp MoM, +110bp YoY) in Jul’22

* Technology’s weight moderated to a 17-month low of 10.9% (-60bp MoM; -80bp YoY).

* Oil & Gas’ weight stood at a five-month low of 6.5% (-80bp MoM and +10bp YoY). The sector now ranks sixth in the allocation of mutual funds – it was in the fifth position a month back.

* In terms of value increase MoM, six of the top-10 stocks were from the BFSI space: ICICI Bank (+INR180.9b), Bajaj Finance (+INR91.5b), SBI (+INR72.7b), HDFC Bank (+INR70.4b), Axis Bank (+INR54.2b), Kotak Mahindra Bank (+INR35b)

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