The month of Nov-21 was another positive month for mutual fund flows. MFs saw net buying across categories like equity funds, hybrid funds and passive funds. On top of that, SIP recorded all-time high inflows of Rs11,005cr in Nov-21. Obviously, all these flows into mutual funds translated into MFs investing aggressively in the stock markets. That is already evident in flow numbers as MFs have offset the selling by FPIs.
Here we look at the month of November in terms of 4 facets of mutual fund investments.
Firstly, we look at the theme for the month and then we follow it up with the major action of the mutual fund segment across the large caps, mid-caps and small caps.
MF Theme for Nov-21 – It was about long on IPOs
It was not just IPOs but a combination of IPOs and recent listings. Mutual Funds across the board gorged on recent listings, especially with a lot of digital companies facing pressure or likely to face pressure from anchor selling. The selling was spread across new-age companies operating in niche segments as well as names with strong fundamentals.
If you just look at the MF investments in fresh issuances, it stood at Rs4,050cr in Nov-21. During the month of November, mutual funds infused record amounts of Rs1,350cr into PB Fintech (owner of Policybazaar) and Rs980cr into One97 Communications (owner of Paytm). It was not just digital plays. Mutual funds infused Rs660crore into Go Fashion and Rs570cr into Latent View Analytics. It also invested in Tarsons, SJS Enterprises and Sapphire Foods; with most investments under the anchor quota.
The most popular IPO in terms of MF coverage, PB Fintech, saw major fund infusions from Axis Mutual Fund, Aditya Birla AMC and Kotak Mutual Fund. On the other hand, Paytm saw some serious investments coming from Aditya Birla Sun Life AMC, Mirae AMC and HDFC Mutual Fund. Overall, IPOs remained the hot theme in November 2021.
Which large caps did MFs prefer; and where did they cut positions?
Let us look at the holding accretion overall among mutual funds. We will look at number of shares instead of value for 2 reasons. Firstly value tends to favour heavier companies and also has a market value accretion component. Now, for the big additions in large cap space.
Among large caps, mutual funds added of 26.04cr shares of Reliance but that was more due to the conversion of partly-paid into fully-paid shares. Yes Bank saw buying of 3.4cr shares in Nov-21 while IndusInd Bank saw MF buying to the tune of 83 lakh shares. Mutual funds also added 18 lakh shares of Hero Moto, 25 lakh shares of Eicher, 53 lakh shares of Bandhan Bank, 24 lakh shares of Berger Paints and 34 lakh share of Dabur.
Among major large cap reductions, mutual funds sold 8.03cr shares of Vedanta on commodity price concerns. MFs also sold 4.17cr shares of Zomato after the sharp rally. Apart from these two stocks, mutual funds also sold about 2.88cr shares of GAIL, 52 lakh shares of HDFC Life Insurance, 25 lakh shares of Biocon and 11 lakh shares of Apollo Hospitals in Nov-21.
Which mid-caps did MFs prefer; and where did they cut positions?
Let us look at the shifts in mid-cap MF holdings during November 2021. Among big additions, mutual funds added 14.2cr shares of Vodafone during the month and 2.38cr shares of Zee Entertainment. Among other accretions in the mid-cap space, MFs added 44 lakh shares of Devyani International, 37 lakh shares of APL Apollo Tubes, 26 lakh shares each of HAL and Glenmark Pharma, 16 lakh shares of Laurus labs and 11 lakh shares of Sun TV.
Among the major stake reductions, Mutual funds sold 2.33cr shares of Tata Power after its recent rally, 1.1cr shares of BHEL and 1cr shares of GMR Infra. Among other reductions in the month of Nov-21, mutual funds sold 37 lakh shares of IRCTC, 17 lakh shares of Syngene International and 18 lakh shares of Tata Chemicals. Mutual funds also sold into Escorts and Godrej Properties during November 2021.
Which small-caps did MFs prefer; and where did they cut positions?
Finally, let us look at the shifts in mid-cap holdings during the month of November 2021. Mutual funds bought 2.2cr shares of Indiabulls Housing Finance after Samir Gehlaut confirmed his exit from the company. Among other big additions, MFs added 82 lakh shares of Zensar, 26 lakh shares of Granules and 22 lakhs shares of Welspun Corp. In addition, MFs also added 22 lakh shares of Fino Payments Bank and 12 lakh shares of Graphite India among small caps in November 2021.
Among the big sells in the small cap space, mutual funds sold 47 lakh shares of Welspun India, 31 lakh shares of Railtel and 20 lakh shares of Elgi Equipment. The movements in the small cap space were largely stock specific.
Overall, November has been a month of calculated churning by the mutual funds. But IPOs and recent listings were the big themes of Nov-21.