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Key observations

Markets bounced back smartly in Oct’22 with Nifty-50 rising 5.4% MoM and almost wiping out the entire YTD’CY22 decline. The Nifty-50 is now up 5.7% YTD’CY22. FIIs turned net buyers of USD1b in Oct’22, after withdrawing USD1.6b in Sep’22. FII outflows stood at USD20.1b YTD. DIIs remained net buyers of USD1.1b in Oct’22. DII inflows stood at USD29.3b YTD

. Investors continued to park money in mutual funds, with inflows and contributions in systematic investment plans (SIPs) reaching new highs of INR130.4b in Oct’22 (up 0.5% MoM and 24% YoY).

After moderating in Sep’22, equity AUM (including ELSS and index funds) of domestic MFs reached new highs of INR16.4t (+4.2% MoM) in Oct’22 as markets rebounded (Nifty up 5.4% MoM). Notably, the month saw a decline in sales of equity schemes (down 25.3% MoM to INR329b). At the same time, redemptions dipped 32.8% MoM to INR185b. Consequently, net inflows decelerated to INR143b in Oct’22 from INR164b in Sep’22.

Total AUM for the MF industry increased 2.8% MoM to INR39.5t in Oct’22, led by a MoM increase in AUM for equity/other ETFs /liquid funds by INR662b/INR278b/INR195b, respectively. Conversely, AUM for income funds declined INR156b.

Some interesting facts

* The month saw notable changes in the sector and stock allocation of funds. On a MoM basis, the weights of Banks (Private and PSU), Technology, Oil & Gas, Capital Goods, and Utilities increased, while the weights of Consumer, NBFCs, Autos, Healthcare, Retail, Chemicals, Telecom, Consumer Durables, and Textiles moderated.

* Private Banks’ weight increased to a 20-month high of 18.7% (+50bp MoM, +110bp YoY) in Oct’22

* PSU Banks’ weight increased to a 32-month high of 3.7% (+20bp MoM and YoY each) in Oct’22

* Technology’s weight, after declining to a 25-month low in Sep’22, climbed in Oct’22 to 10% (+20bp MoM; -170bp YoY)

* Consumers’ weight, after rising to an 18-month high in Sep’22, moderated in Oct’22 to 6.8% (-30bp MoM, +40bp YoY)

* In terms of value increase MoM, five of the top-10 stocks were from the BFSI space: Axis Bank (+INR107.3b), ICICI Bank (+INR75.6b), HDFC Bank (+INR61.1b), SBI (+INR45.4b), and HDFC (+INR44.4b).

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