Published on 14/03/2019 1:11:39 PM | Source: Motilal Oswal Securities Ltd

Equity AUM stable, gross inflows lowest in two years - Motilal Oswal

Posted in Top Stories| #Special Report #Motilal Oswal

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Key observations

* Indian benchmark indices ended flat (-0.4% MoM) for the third consecutive month in Feb’19, as the street exercised caution amid a flurry of unsupportive domestic and global cues. Nevertheless, mutual fund investors appeared to be undeterred by market volatility, with the contribution of systematic investment plans (SIPs) hitting at a new high of INR81b in the month (+26% YoY and 2x in two years).

* After falling by 1.6% in the previous month, equity AUM of domestic MFs declined marginally by 0.1% MoM to INR8.3t in Feb’19 owing to bleak market sentiment. Redemptions declined by 8.1% MoM to INR145b, but an even higher fall in equity scheme sales (-8.2% MoM to INR192b – lowest in two years) led to a decline in net inflows from INR51b in Jan’19 to INR46b in Feb’19.

* Total AUM of the MF industry declined 0.9% MoM to INR23.2t in Feb’19, primarily led by a decrease in AUM of liquid funds (by INR212b), balanced fund (by INR28b), income funds (by INR17b) and equity funds (by INR10b).

* Equity AUM, as a percentage of India’s market capitalization, increased by 60bp YoY to 5.9% in Feb’19.


Some interesting facts

* The month saw a notable change in sector and stock allocation of funds. On an MoM basis, the weight of Oil & Gas, Private Banks, Consumer, Cement, Capital Goods and Utilities increased, while that of PSU Banks, Healthcare, NBFCs, Metals and Chemicals moderated.

* Oil & Gas weight increased for the fourth successive month to reach a new high of 7.8% (+20bp MoM and +120bp YoY). The sector is now at the fifth position in sector allocation of mutual funds – it was at the seventh position 12 months ago.

* Consumer’s weight climbed to a new high of 8.1% (+20bp MoM and +140bp YoY).

* Of the top-10 stocks in terms of value increase MoM, five were from Private Banks and Oil & Gas.

* Axis Bank was one of the preferred stocks among MFs in the month, with net buying by 19 funds. Value increased by INR21b, despite the stock correcting by 1.9% in the month.

* Kotak Mahindra Bank was another preferred stock in the month, with net buying by 15 funds. Value increased by INR20.4b, despite the stock correcting by 3.3% in the month.

* Reliance Industries saw a value increase of INR19.2b in Feb’19, despite stock being flat (+0.4% MoM). Notably, the stock saw net buying by 17 of the top-20 funds.

* SBI saw net selling by five funds and net buying by 13 funds in Feb'19. Notably, its value decreased by INR14.8b, as the stock was down 8% in the month.


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