Equity mutual funds at new highs; private banks most preferred

Key Highlights: 

• Equity AUM  of the mutual fund industry reached to a new high of Rs 6.3 lakh crore
• Private banks most preferred stock in Mutual Fund markets

In the month of July 2017, equity asset under management (AUM) of the mutual fund industry reached a new high of Rs 6.3 lakh crore, rising by 6.4% on month-on-month basis. 

According to Motilal Oswal, this would be the quickest over Rs 1 lakh crore addition in the mutual fund industry. 

Equity AUM, which was just at Rs 4.97 lakh crore by end of January 2017, rose to Rs 5.9 lakh crore in June 2017 and further to Rs 6.29 lakh crore in July 2017. 

As per Motilal Oswal, this performance was led by rise in market indices like Nifty which has gained nearly 5.8% on month-on-month basis. 

Equity AUM, as a percentage of total AUM, increased by 30 basis points on MoM to 31.5% in July. Equity AUM accounts for 4.7% of India’s market capitalisation. 

While total equity value of the top-20 AMCs grew by 7.3% month-on-month (MoM) and 52.6% on year-on-year (YoY) as against Nifty which increased by 5.8% MoM and 16.7% YoY. 

The report said, "Of the top 10 stocks in terms of value increase MoM, seven were from Financials."

HDFC Bank was one of the preferred stocks among MFs in July, saw net buying by 17 funds. The banks value increased by Rs 4,120 crore; the stock was up by 8% for the month.

Other Financials witnessing an increase in value on an MoM basis were SBI (Rs 3,610 crore), HDFC (Rs 3,080 crore), ICICI Bank (Rs 2,060 crore), Yes Bank (Rs 1,450 crore), Kotak Mahindra Bank (Rs 1,160 crore ) and Indusind Bank (Rs 1,100 crore).

On sector-wise performance, Mutual Funds this month showed interest in NBFCs, Private Banks, PSU Banks, Metals and Oil & Gas—these sectors saw an MoM increase in weight.

Meanwhile Consumer, Healthcare, Autos, Telecom, Media, Infrastructure, Chemicals and Textiles saw an MoM decrease in weight.

Private Banks had the highest holding by 17.7% in July, followed by Auto (10.1%), Capital Goods (8.3%) and NBFC (7.9%).

Moreover, gross inflows remained steady at Rs 28,000 crore, witnessing increase of  6% MoM, redemptions fell 16% MoM to Rs 15,300 crore. 

Consequently, net inflows increased by a whopping 56% from Rs 8,200 crore  in June to Rs 12,700 crore in July 2017 - a highest flows since January 2008.

As an overall, Total AUM of the MF industry rose 5.3% MoM in July to touch a new high of Rs 19.97 lakh crore. The rise during the month of July was primarily led by a rise in AUM of income funds (Rs 67,200 crore), equity funds (Rs 38,100 crore) and balanced funds (Rs 11,700 crore).

Many experts believe the mutual fund industry to double its assets under management (AUM) to Rs 35 lakh crore over the next five years. 

A PwC report released at an Indian Chamber of Commerce event earlier said, "A surprisingly sharp rise in systematic investment plans promoted more sustainable growth from the industry as more people moved away from the concept of large lump sum investments."

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