01-01-1970 12:00 AM | Source: Motilal Oswal Financial Services Ltd
Fund Folio : Equity AUM reaches INR10t to achieve another milestone; see slowdown in outflows - Motilal Oswal
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FUND FOLIO

Equity AUM reaches INR10t to achieve another milestone; see slowdown in outflows

Key observations

* After consolidating in Jan’21 (down 2.5% MoM), the Nifty headed north in Feb’21 (up 6.6% MoM). It closed above the psychological 15k mark on 8th Feb’21 and ended the month at 14,529. The Union Budget was a major positive, with better transparency and higher capex spending, which buoyed the market in the first half of Feb’21. In the latter part of Feb’21, there was sustained correction on the back of sell-off in the global bond markets and rising COVID cases in India. Mid- and small-cap indices outperformed the Nifty in Feb’21.

* However, investors have capitalized on the market rally to book profit and rebalance the portfolio as markets continue to achieve new highs, leading to moderation in domestic mutual fund (MF) flows.

* Equity AUM (incl. ELSS and index funds) of domestic MFs reached new highs of INR10t (+7.9% MoM), led by a rise in market indices (Nifty up 6.6% MoM) and decline in redemptions (down 22.9% MoM to INR286b). Furthermore, equity scheme sales fell 12.5% MoM to INR222b. This led to slowdown in net outflows to INR64b in Feb’21 (v/s outflows of INR117b recorded in Jan’21).

* The MF industry’s total AUM increased 3.7% MoM (INR1.1t) to INR31.6t in Feb’21, primarily weighed by equity funds (INR731b), liquid funds (INR281b), other ETFs (INR171b), and balanced funds (INR162b). Notably, income funds saw a decrease of INR238b MoM.

 

Some interesting facts

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

* Consumer’s weight has continued to moderate for the last nine months to a 34-month low of 7.1% (-70bp MoM, -120bp YoY). As a result, the sector slipped to the fifth position in MF allocation, making way for the Oil & Gas sector in the fourth position.

* PSU Banks’ weight – after hitting an all-time low in Sep’20 to 2% – saw positive interest among MFs, with an increase in weight for four consecutive months to 3.3% (+70bp MoM, -40bp YoY).

* In terms of value increase MoM, 5 of the Top-10 stocks were from Financials: SBI (+INR119.4b), ICICI Bank (+INR81.4b), HDFC Bank (+INR70.4b), Axis Bank (+INR31.9b), and Bajaj Finance (+INR19.6b).

* Stocks exhibited maximum decline in value MoM: Bharti Airtel (-INR24.8b), TCS (-INR16.4b), HUL (-INR10.1b), Dr Reddy’s Labs (-INR9.3b), and Britannia Inds (-INR7.3b).

 

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