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FUND FOLIO : Equity inflows stable; AUM reaches INR13t to achieve another milestone

Key observations

* The Nifty closed higher for the fifth straight month in Sep'21. The index oscillated ~900 points before closing at 486 points (or 2.8%) higher MoM at 17,618. The Nifty is up 26% in CY21YTD. FII inflows were robust at USD1.1b. DIIs saw inflows for the seventh consecutive month at USD0.8b.

* The markets continued to achieve new highs in 2QFY22 - the Nifty crossed the 17k mark and the Sensex touched the 60k milestone - buoyed by the decline in COVID cases, a significant pickup in the pace of vaccination, and the consequent sharp recovery in economic activity. Investors continued to park money in mutual funds, with inflows and contributions in systematic investment plans (SIPs) crossing INR100b to reach new highs of INR103.5b in Sep'21 (up 4.3% MoM and 32.9% YoY).

* Equity AUM (including ELSS and index funds) of domestic MFs increased 3.7% MoM to INR13.3t in Sep'21. This was on account of a rise in market indices (Nifty up 2.8% MoM) and an increase in equity scheme sales (up 11.5% MoM to INR409b). At the same time, redemptions increased 17.5% MoM to INR314b. Consequently, net inflows moderated to INR96b in Sep'21 from INR100b in Aug'21.

* Total AUM for the MF industry saw a marginal increase (0.4% MoM) to INR36.7t in Sep'21, led by a MoM increase in the AUM of equity funds (INR476b), other ETF funds (INR186b), and balanced funds (INR143b). Notably, liquid funds posted a decrease of INR555b MoM.

Some interesting facts

* The month saw notable changes in the sector and stock allocation of funds. On a MoM basis, the weights of Utilities, Oil & Gas, Automobiles, Real Estate, PSU Banks, Consumer Durables, Retail, and Media increased, while those of Telecom, Metals, Private Banks, Healthcare, Technology, Cement, Insurance, and Chemicals moderated.

* After reaching a 17-month low in Aug'21, Automobiles climbs in Sep'21 to 6.1% (+20bp MoM; -50bp YoY).

* Utilities' weight reached seven-month highs of 3.4% (+50bp MoM; -30bp YoY); the sector hit a 49-month low in Aug'21.

* Metals moderated for the second consecutive month to 2.8% in Sep'21 (-30bp MoM; +70bp YoY).

* In terms of value increase MoM, three of the top 10 stocks were from Banking: Kotak Mahindra Bank (+INR38.4b), SBI (+INR29.1b), and HDFC Bank (+INR22.8b).

* Stocks that exhibited maximum decline in value MoM: Bharti Airtel (-INR37.3b), Tata Steel (-INR23.9b), ICICI Bank (-INR20.9b), Infosys (-INR15.8b), and BPCL (-INR12.4b).

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