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FUND FOLIO (September 2021): Equity inflows see a slowdown; SIP contribution at a new high, INR100b in sight!

Key observations

* The Nifty crossed the 17,000 mark in Aug'21 to touch a record high after remaining muted over the last two months. It ended 8.7% higher MoM in Aug'21 to close at 17,132. FII inflows returned to USD1b in Aug'21 after recording the highest outflows (-USD1.7b) since Mar'20 in Jul'21. DIIs saw inflows for six consecutive months at USD0.9b.

* The market is scaling new highs, led by strong earnings delivery, benign liquidity, and buoyant sentiments. Investors continued to park money in mutual funds, with inflows and contributions in systematic investment plans (SIPs) scaling new highs of INR99.2b in Aug'21 (up 3.3% MoM and 27.4% YoY).

* Equity AUM (including ELSS and index funds) of domestic MFs rose by 5.4% MoM to INR12.8t in Aug'21, led by a rise in market indices (Nifty up 8.7% MoM). The month saw a decline in sales of equity schemes (down 16.8% MoM to INR367b). The pace of redemptions picked up to INR267b (up 20.1% MoM). Consequently, net inflows slowed to INR100b in Aug'21 from INR219b in Jul'21.

* Total AUM for the MF industry increased by 3.6% MoM (INR1.3t) to INR36.6t in Aug'21, primarily led by a MoM increase in the AUM of equity funds (INR661b), other ETF funds (INR302b), and balanced funds (INR261b).

Some interesting facts

* The month saw notable changes in the sector and stock allocation of funds. On a MoM basis, the weightage of NBFCs, Technology, Private Banks, Telecom, Consumer, Oil and Gas, and Insurance increased, while that of Metals, Automobiles, Healthcare, PSU Banks, Consumer Durables, Utilities, and Cement moderated.

* NBFCs’ weightage increased to an 18-month high of 7.9% (+50bp MoM and +110bp YoY). The sector now ranks third in the allocation of MFs – it was in the sixth and fourth position a year and a month back.

* Technology continued to scale new heights as its weightage increased to 12.1% (+40bp MoM; +240bp YoY).

* Automobiles’ weightage hit a 17-month low of 5.9% (-30bp MoM; -50bp YoY).

* In terms of value increase MoM, six of the top 10 stocks were from Financials: HDFC Bank (+INR102.9b), ICICI Bank (+INR60.2b), HDFC (+INR58.1b), Bajaj Finance (+INR56.2b), Axis Bank (+INR44b), and SBI Life Insurance (+INR22.1b).

* Stocks that exhibited a maximum decline in value MoM: SAIL (-INR9b), Aurobindo Pharma (-INR8.3b), NMDC (-INR7.3b), JSPL (-INR6.8b), and Balkrishna Industries (-INR6.2b).

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