 "investments, mutual funds")
Mutual funds (MFs) in India displayed a strategic shift in their investment focus during March 2024, according to data analysed by brokerage Motilal Oswal. The focus has turned towards sectors like capital goods, consumer durables, private banks, automobiles, and healthcare, leading to a month-over-month (MoM) rise in their weightage within fund portfolios.
Conversely, sectors like technology, public sector banks (PSU banks), cement, real estate, infrastructure, and media witnessed a decrease in their MoM weightage, indicating a potential shift in investor sentiment.
Private Banks Remain Top Holding, But Diversification Takes Root
Private banks emerged as the top sector holding for MFs in March, accounting for a significant 16.9% of their portfolio. However, the data highlights a growing trend towards diversification, with technology (8.7%), automobiles (8.3%), capital goods (7.9%), and healthcare (7.4%) following closely behind.
Growth Sectors: Capital Goods, Telecom
Telecom, metals, retail, capital goods, and consumer durables experienced the most significant MoM increase in value.
The top sectors where MF ownership vis-à-vis the BSE 200 is at least 1% higher: Healthcare (17 funds over-owned), Capital Goods (15 funds overowned), Consumer Durables (10 funds over-owned), Autos (9 funds over-owned), and NBFCs (9 funds over-owned).
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The top sectors where MF ownership vis-à-vis the BSE 200 is at least 1% lower: Consumer (20 funds under-owned), Oil & Gas (18 funds underowned), Technology (14 funds under-owned), Private Banks (14 funds under-owned), and Utilities (13 funds under-owned).
Top Nifty50 stocks bought by mutual funds in March 2024:
Highest MoM net buying: This refers to the companies where MFs bought more shares than they sold in March compared to the previous month (February).
HDFC Life (+17%): Mutual Funds were the most active buyers of HDFC Life stock in March, increasing their holdings by 17% compared to February.
ITC (+16.3%): ITC, the cigarette and FMCG giant, saw the second-highest MoM net buying by MFs, with their holdings increasing by 16.3%.
TCS (+10.7%): India's leading IT company, TCS, also attracted significant buying interest from MFs, with their holdings rising by 10.7%.
Eicher Motors (+9.5%): Eicher Motors, known for its Royal Enfield motorcycles, witnessed strong buying activity by MFs, with their holdings increasing by 9.5%.
JSW Steel (+7.6%): JSW Steel, a major steel producer, rounded out the top 5 with a 7.6% increase in holdings by MFs.
Nifty Midcap 100: MFs were net buyers in 57 per cent of the stocks:
The highest MoM net buying in Mar’24 was seen in Mazagon Dock, SAIL, Dr Lal Pathlabs, Bandhan Bank, and JSW Energy.
Nifty Smallcap 100: MFs were net buyers in 60 per cent of the stocks:
The highest MoM net buying in Mar’24 was witnessed in NLC India, AAVAS Financiers, Mahanagar Gas, Piramal Pharma, and Happiest Minds.
Top schemes: This refers to the mutual fund schemes that manage the highest amount of investor money.
MoM Change in NAV: MoM stands for Month-over-Month, and NAV refers to Net Asset Value, which is the market value of the underlying assets in an MF scheme divided by the number of outstanding units. So, MoM change in NAV reflects the performance of the scheme over the previous month (February) based on the change in its NAV.
The data indicates that the following MFs had the highest increase in NAV from February to March:
Axis ELSS Tax Saver Fund (+5.2% MoM): This scheme delivered the highest MoM increase in NAV (5.2%) among the top 25 by AUM.
SBI Focused Equity Fund (+5.2% MoM): Tied with Axis ELSS, this fund also saw a 5.2% increase in NAV.
Axis Bluechip Fund (+4.1% MoM): This Axis fund displayed a 4.1% rise in NAV.
SBI Bluechip Fund (+3.2% MoM): SBI's large-cap fund experienced a 3.2% NAV increase.
Nippon India Large Cap Fund (+2.5% MoM): This Nippon India fund rounded out the top 5 with a 2.5% NAV increase.
Investors in these MFs likely saw their investments grow in value during March due to the rise in NAV.
This doesn't necessarily guarantee future performance, but it suggests these funds outperformed the broader market (as reflected by their AUM ranking) in March.
Top 10 stocks that experienced the highest increase in value compared to February. These stocks were:
ITC
HDFC Bank
L&T (Larsen & Toubro)
ICICI Bank
Maruti Suzuki
Reliance Industries
Bharti Airtel
Kotak Mahindra Bank
Interglobe Aviation
Avenue Supermarts (DMart)
This indicates that investor sentiment was positive towards these companies in March, and their stock prices rose significantly compared to the previous month.
Top Losers (Tech Sector Focus):
Five out of the top 10 stocks that witnessed the biggest decline in value belonged to the technology sector. These were:
- Infosys
- HCL Tech
- Coforge
- Persistent Systems
- LTIMindtree
This suggests a potential correction or profit-booking within the tech sector in March. Stock prices in these companies might have fallen compared to February.
Top 20 funds: Value of equity MFs rises 2.3% MoM and 52.1% YoY
Total equity value for the top 20 AMCs increased 2.3% MoM (+52.1% YoY) in Mar’24 vs. a 1.6% MoM rise (+28.6% YoY) for the Nifty-50.
Among the Top 10 funds, the maximum MoM increase was seen in ICICI Prudential Mutual Fund (+4.9%) followed by Kotak Mahindra Mutual Fund (+3.2%), SBI Mutual Fund (+2.7%), Nippon India Mutual Fund (+2.7%), and UTI Mutual Fund (+2.5%).
According to Motilal Oswal Fund Folio Report, the MF industry’s total assets under management jumped 35% year on year (by Rs 14 trillion) to Rs 53.4 trillion in FY24, propelled by growth in equity funds, other ETFs, balanced funds, arbitrage funds and liquid funds. Investors continued to park their money in mutual funds, with inflows and contributions in systematic investment plans (SIPs) reaching a new high of Rs 192.7 billion in March 2024.
However, on a monthly basis, total AUM of the MF industry declined 2.1% to Rs 53.4 trillion in March 2024, primarily due to a MoM decrease in AUM for liquid, and income funds. Conversely, the AUM for equities, other ETFs, and balanced funds increased MoM.
