In July 2022, the Nifty surged by +8.73%. This comes after 4 consecutive months of fall in the Nifty. The robustness was also visible in the smaller indices. In July 2022, the mid-cap index rallied by +12.03% while the small cap index also surged by +9.29%. The broad-based rally was also manifested in the improvement in advance / decline ratio of the overall market. But, what exactly led to this sharp rally in the indices, especially in the 2nd half of July 2022?
One of the primary driving factors for the rally was the turnaround in FPI sentiments. After being net sellers for 9 months since October 2021, FPIs turned net buyers to the tune of Rs4,989 crore in equities in the month of July 2022. One can argue that the inflow is just about $618 million against FPI outflows of $35 billion, but it is the shift in sentiments that really matters. The other factor was the Fed going relatively soft and indirectly hinting that they may do a rethink if the US economy saw negative growth. These factors helped the rupee stabilize around the 80/$ levels and aided the bounce in the stock market indices.
During July 2022, the 10 year bond yields trended lower compared to June 2022 and stayed in the range between 7.2% and 7.4%. The panic of June was not visible in July and that helped bond prices stabilize, which was reflected in better performance by the debt funds, especially the ones with longer duration. One factor responsible for the stable bond yields was the hope that the RBI would go slow in its August MPC meeting, even if the Fed opted for a more hawkish tone. Here is the mutual fund performance story of July 2022.
Top performing Regular Plans (Growth Option) on 5-year returns (as on 31st Jul-22):
| Name of Fund | 1-Year Return | 3-Year Return | 5-Year Return |
| Canara Robeco Blue-Chip (G) | 3.972% | 17.929% | 13.165% |
| Axis Blue-Chip Fund (G) | 1.338% | 14.366% | 13.020% |
| ICICI Pru Blue Chip (G) | 10.511% | 16.632% | 11.615% |
| Data Source: Morningstar |
Top performing Regular Plans (Growth Option) on 5-year returns (as on 31st Jul-22):
| Name of Fund | 1-Year Return | 3-Year Return | 5-Year Return |
| Quant Active Fund (G) | 7.257% | 32.965% | 20.987% |
| Mahindra Manulife Multi (G) | 4.798% | 23.231% | 13.391% |
| Nippon India Multi Cap (G) | 18.118% | 18.456% | 12.242% |
| Data Source: Morningstar |
Top performing Regular Plans (Growth Option) on 5-year returns (as on 31st Jul-22):
| Name of Fund | 1-Year Return | 3-Year Return | 5-Year Return |
| Quant Mid-Cap Fund (G) | 12.656% | 34.271% | 19.147% |
| PGIM India Mid-Cap Fund (G) | 10.708% | 37.904% | 17.751% |
| Axis Mid-Cap Fund (G) | 4.621% | 24.053% | 16.914% |
| Data Source: Morningstar |
Top performing Regular Plans (Growth Option) on 5-year returns (as on 31st Jul-22):
| Name of Fund | 1-Year Return | 3-Year Return | 5-Year Return |
| Quant Small Cap Fund (G) | -1.793% | 44.363% | 19.881% |
| Axis Small Cap Fund (G) | 7.788% | 29.150% | 18.369% |
| SBI Small Cap Fund (G) | 9.307% | 29.017% | 17.637% |
| Data Source: Morningstar |
Top performing Regular Plans (Growth Option) on 5-year returns (as on 31st Jul-22):
| Name of Fund | 1-Year Return | 3-Year Return | 5-Year Return |
| Quant Tax Plan (G) | 8.515% | 35.762% | 20.507% |
| Canara Robeco Tax Saver (G) | 5.587% | 21.534% | 15.111% |
| Mirae Asset Tax Saver (G) | 4.945% | 20.360% | 14.674% |
| Data Source: Morningstar |
Top performing Regular Plans (Growth Option) on 5-year returns (as on 31st Jul-22):
| Name of Fund | 1-Year Return | 3-Year Return | 5-Year Return |
| Quant Absolute Fund (G) | 8.196% | 27.955% | 17.750% |
| ICICI Pru Equity & Debt (G) | 16.716% | 19.564% | 13.215% |
| BOI AXA Mid and Small (G) | -1.775% | 25.185% | 11.809% |
| Data Source: Morningstar |
Top performing Regular Plans (Growth Option) on 5-year returns (as on 31st Jul-22):
| Name of Fund | 1-Year Return | 3-Year Return | 5-Year Return |
| Kotak Debt Hybrid (G) | 5.020% | 10.815% | 8.012% |
| ICICI Pru Regular Savings (G) | 6.785% | 9.202% | 7.871% |
| Canara Robeco Hybrid (G) | 3.347% | 9.542% | 7.567% |
| Data Source: Morningstar |
Top performing Regular Plans (Growth Option) on 5-year returns (as on 30th Jun-22):
| Name of Fund | 1-Year Return | 3-Year Return | 5-Year Return |
| Kotak Equity Arbitrage (G) | 3.463% | 4.172% | 5.063% |
| Nippon India Arbitrage (G) | 3.264% | 4.047% | 5.053% |
| Edelweiss Arbitrage Fund (G) | 3.386% | 4.170% | 5.027% |
| Data Source: Morningstar |
Top performing Regular Plans (Growth Option) on 5-year returns (as on 31st Jul-22):
| Name of Fund | 1-Year Return | 3-Year Return | 5-Year Return |
| Edelweiss G-Sec Fund (G) | 2.523% | 6.016% | 7.321% |
| DSP G-Sec Fund (G) | 2.455% | 6.131% | 6.697% |
| IDFC G-Sec Fund (G) | 1.372% | 5.899% | 6.657% |
| Data Source: Morningstar |
Top performing Regular Plans (Growth Option) on 5-year returns (as on 31st Jul-22):
| Name of Fund | 1-Year Return | 3-Year Return | 5-Year Return |
| ABSL Corporate Bond (G) | 3.110% | 6.863% | 7.133% |
| L&T Triple Ace Bond (G) | 2.296% | 6.160% | 6.929% |
| HDFC Corporate Bond (G) | 2.483% | 6.455% | 6.887% |
| Data Source: Morningstar |
Top performing Regular Plans (Growth Option) on 5-year returns (as on 31st Jul-22):
| Name of Fund | 1-Year Return | 3-Year Return | 5-Year Return |
| ICICI Pru Credit Risk Fund (G) | 4.860% | 7.664% | 7.288% |
| HDFC Credit Risk Fund (G) | 3.549% | 7.558% | 6.900% |
| Baroda Credit Risk Fund (G) | 12.571% | 7.864% | 6.558% |
| Data Source: Morningstar |
Top performing Regular Plans (Growth Option) on 5-year returns (as on 31st Jul-22):
| Name of Fund | 1-Year Return | 3-Year Return | 5-Year Return |
| Quant Liquid Plan (G) | 3.918% | 4.659% | 5.635% |
| IDBI Liquid Fund (G) | 3.726% | 4.207% | 5.398% |
| Mahindra Manulife Liquid (G) | 3.705% | 4.111% | 5.339% |
| Data Source: Morningstar |
The month of July 2022 was a welcome change as the large cap and the mid cap indices gave strong and affirmative returns. If June was the month of macro chaos, then July 2022 was a month of relative stability. That was reflected in the equity markets. Of course, the risk of central banks staying hawkish is still there and commodity inflation will take much longer to go away. However, markets are convinced that the central banks are on the right track and the economic results should follow sooner rather than later.
The good news is that the equity and debt fund rankings have largely maintained consistency of top performers across categories. This makes the rankings a reliable barometer and decision point for investors. Just as equity funds gained from relatively stable macros and FPI flows, debt markets also benefited from bond yields topping out. The story would eventually be scripted by central banks, but for July; there has been some respite for equity and debt funds. That is the good news!
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