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Key observations

* The Nifty managed to close in green (up 1.2% MoM) in Feb’24 after consolidating in Jan’24. Notably, the index was extremely volatile and swung around 767 points before closing 257 points higher. In Feb’24, FIIs reported muted inflows of USD0.5b. DIIs recorded the seventh consecutive month of inflows at USD3.1b.

* Equity AUM for domestic MFs (including ELSS and index funds) increased 2.7% MoM to INR25.3t in Feb’24, led by a rise in market indices (Nifty up 1.2% MoM) and an increase in sales of equity schemes (up 13.7% MoM to INR646b). However, the pace of redemptions increased to INR354b (up 10.2% MoM). Consequently, net inflows increased to INR292b in Feb’24 from INR247b in Jan’24.

* Total AUM of the MF industry continued to scale new highs and reached INR54.5t in Feb’24 (+3.4% MoM), primarily led by a MoM rise in AUM for liquid (INR877b), equities (INR672b), other ETFs (INR176b), and balanced (INR131b) funds. Conversely, the AUM for income funds declined INR146b MoM.

* Investors continued to park their money in mutual funds, with inflows and contributions in systematic investment plans (SIPs) reaching a new peak of INR191.9b in Feb’24 (up 1.9% MoM and 40.2% YoY). 

Some interesting facts

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

* Capital Goods’ weight increased to a 91-month high of 7.7% (+30bp MoM, +120bp YoY) in Feb’24. The sector now ranks fourth in MF allocation – it was in the sixth position a year back.

* Oil & Gas’ weight rose for the third consecutive month to a 20-month high of 6.9% (+30bp MoM and +40bp YoY) in Feb’24.

* Private Banks’ weight declined for the seventh consecutive month to a 26-month low of 16.7% (-30bp MoM, 220bp YoY) in Feb’24.  

* Consumer’s weight declined for the fourth consecutive month to 5.8% (-30bp MoM, -120bp YoY) in Feb’24 – the lowest since Dec’16.

* In terms of value change MoM, divergent interests were visible within sectors: The top 5 stocks that saw a maximum increase in value were SBI (+INR96.6b), Reliance Industries (+INR67b), TCS (+INR42.8b), Maruti Suzuki (+INR39.9b), and Power Grid Corp. (+INR31.1b). 

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