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SUMMARY: AUM scales new highs and breaches the INR39t+ level; equity inflows slow down

Key observations

The Nifty ended 3.5% higher MoM at 17,759 in Aug’22, closing higher for the second consecutive month. The Nifty is up 3.4% in CY22YTD. The Nifty Midcap 100 (+6.2% MoM) and Nifty Smallcap 100 (+4.9%) outperformed the Nifty-50 during the month. FIIs clocked the highest inflows since Jan’21 at USD6.8b in Aug’22; YTD’CY22 FII outflows stood at USD20.5b. DIIs turned sellers of USD0.9b in Aug’22 after 17 months of buying; however, YTD’CY22 DII inflows stood at USD27.1b.

Investors continued to park money in mutual funds, with inflows and contributions in systematic investment plans (SIPs) reaching new highs of INR126.9b in Aug’22 (up 4.6% MoM and 27.9% YoY).

Total AUM of the MF industry scaled new highs and reached INR39.3t in Aug’22 (+4.2% MoM), primarily fueled by a MoM increase in AUM of equities (INR727b), liquid (INR594b), other ETFs (INR231b), and balance (INR125b) funds. Equity AUM for domestic MFs (including ELSS and index funds) increased 4.8% MoM to INR15.9t in Aug’22. This was because of a rise in market indices (Nifty up 3.5% MoM) and an increase in equity scheme sales (up 23.6% MoM to INR376b). At the same time, redemptions increased sharply by 61.7% MoM to INR239b. Consequently, net inflows moderated to INR137b in Aug’22 from INR157b in Jul’22.

Some interesting facts

* The month saw notable changes in the sector and stock allocation of funds. On a MoM basis, the weights of Private Banks, Capital Goods, Utilities, Automobiles, Retail, and Chemicals increased, while the weights of Technology, Healthcare, Oil & Gas, and Insurance moderated.

* Private Banks’ weight rose for the second consecutive month to an 18-month high of 18.3% (+40bp MoM, +120bp YoY) in Aug’22

* Automobiles’ weight increased for the fifth consecutive month to a 44-month high of 7.8%. The sector now ranks third in

* Technology’s weight moderated to a 24-month low of 10% (-90bp MoM; -210bp YoY).

* Healthcare’s weight stood at a 30-month low of 6.3% (-20bp MoM and -120bp YoY).

* In terms of value increase MoM, four of the top-10 stocks were from the BFSI space: ICICI Bank (+INR104.7b), HDFC Bank (+INR43.3b), Kotak Mahindra Bank (+INR25.2b), and Axis Bank (+INR17b).

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