Large cap, mid-cap and small caps that MFs traded in September 2022

Here we look at the major large cap, mid-cap and small cap stocks that the mutual funds bought and sold in the month of September 2022.

October 14, 2022 12:55 IST | India Infoline News Service
FPI flows in September 2022 were a major disappointment after the elevating feeling of $6.44 billion coming in from FPIs in August 2022. In the month of September, the FPIs were net buyers till around the 20th of September. However, post the Fed hiking rates by another 75 bps, FPIs sold nearly $2.4 billion of equities in Indian markets, ending the month with net outflows of $930 million. The good news is that the domestic funds and LIC continued to be net buyers, largely neutralizing the impact on the stock market indices.

Indian equity mutual funds saw inflows more than doubling sequentially in September 2022. Two things stood. NFO inflows stood at Rs8,374 crore for the month (largely sectoral funds) while the net inflow from SIPs (largely equity funds) stood at Rs12,976 crore. Mutual funds can take solace from the fact that even in a tough month, with a plethora of global headwinds, the SIP flows managed to touch an all-time record. Even amidst heavy debt fund selling, equity funds have continued to attract flows; thanks to NFOs and SIPs.

The big question, then, is what did the mutual funds do with all these flows and where did they allocate these funds. Here we look at the major large cap, mid-cap and small cap stocks that the mutual funds bought and sold in the month of September 2022. This is a macro picture at the overall mutual fund level and not focussed on any specific AMC. The idea is to gain insights into the stock preferences of domestic mutual funds as a whole.

What are the large caps that mutual funds bought and sold in September 2022

For the purpose of defining large cap stocks, we will stick to the AMFI definition based on market cap rankings. Let us understanding this AMFI ranking methodology for large caps. The universe of listed stocks on NSE and BSE are ranked descending based on their market cap. Out of this list, the top-100 stocks by market capitalization are classified as large cap stocks. This list is reviewed by AMFI every 6 months to ensure definitions are current. Here are the major large cap stocks that mutual funds bought and sold in September 2022.

We begin with the large cap buying in September 2022. Overall, the mutual funds added 114 lakh shares of HDFC Life Insurance, 96 lakh shares of DLF Ltd, 62 lakh shares of UPL Ltd, 39 lakh shares of Interglobe Aviation, 26 lakh shares of Hero Motocorp, 25 lakh shares of IRCTC Ltd, 24 lakh shares of Adani Enterprises and 21 lakh shares of Berger Paints. Mutual funds also added smaller quantities of Adani Total Gas and Piramal Enterprises. Interestingly, some of the stock buys have been common over the last few months like HDFC Life, Berger Paints and Adani Total Gas. Buying has been focused on stock corrections, where there is value offered on the table.

We now turn to major large cap selling by mutual funds in the month of September 2022. The selling in mineral and metal stocks continued for the third month in succession, even as there was concerted selling in hydrocarbon related PSUs too. A total of 1,081 lakh shares of Tata Steel were sold, apart from 39 lakh shares of JSW Steel and 262 lakh shares of Vedanta Ltd. There seems to be a bias towards selling out of metals in the light of the pressure on metal prices due to the LME prices reacting negatively to weak Chinese demand. A total of 354 lakh shares of Indian Oil Corporation and 336 lakh shares of GAIL India were sold in the hydrocarbon space. In addition, the Indian mutual funds sold 174 lakh shares of Tata Motors as well as 19 lakh shares of Mindtree Ltd and 8 lakh shares of Bajaj Auto. Apart from these, the mutual funds sold smaller quantities in Adani Transmission and Adani Green Energy.

What are the mid-caps that mutual funds bought and sold in September 2022

Let us quickly turn to the methodology deployed to determine if a stock is mid-cap? Here again, we stick to the AMFI definition. Once the top 100 stocks by market cap are classified as large cap stocks (as explained previously), the 101st to 250th ranked stocks by market cap are classified as mid-cap stocks. Here is a quick glance at the mid-cap stocks that mutual funds bought and sold in the month of September 2022.

Let us focus on the mid-cap buying first. In September 2022, mutual funds overall added 633 lakh shares of Punjab National Bank and 400 lakh shares of BHEL. Mutual Funds also added 197 lakh shares of CG Power & Industrial Solutions, 106 lakh shares of LIC Housing Finance, 100 lakh shares of Canara Bank, 96 lakh shares of Devyani International, 77 lakh shares of Syngene International, 27lakh shares of Hatsun Agro Products and 24 lakh shares of Sun TV Network. In addition, mutual funds also added a small quantity of Abbott India. The mid-cap buying was focused on alpha targets, buying stocks with the high favourable price traction.

We now turn to the major mid-cap selling. In September 2022. Mutual Funds sold 1,629 lakh shares of Vodafone Idea, 448 lakh shares of Motherson Sumi Wiring and 300 lakh shares of Ashok Leyland among the heavy sell candidates. Mutual funds also sold 72 lakh shares of SAIL, 69 lakh shares of Bank of India, 18 lakh shares of Aditya Birla Capital and 11 lakh shares of Varun Beverages Ltd. In addition, the mutual funds were also marginal sellers in ICICI Securities, Gujarat Fluorochemicals and L&T Technology Services (LTTS).

What are the small caps that mutual funds bought and sold in September 2022

Finally we turn to the small cap stocks category. On market cap ranking, the stocks ranked 251st and lower are classified as small caps as per AMFI definition. We continue to use that definition for our rankings also. Here we take a quick look at some of the key small cap stocks where mutual funds were active in September 2022.

In September 2022, mutual funds added 319 lakh fresh shares of Ujjivan Small Finance Bank, 156 lakh shares of Triveni Turbine, 59 lakh shares of GR Infraprojects, 24 lakh shares of Railtel Corporation, 15 lakh shares of Jubilant Ingrevia and 8 lakh shares each of Mayur Uniquoters and Safari Industries. Mutual funds also added smaller quantities of AMI Organics in the month of September 2022.

Finally, let us look at small-cap selling in September 2022. Mutual funds sold 115 lakh shares of Indiabulls Housing Finance, 69 lakh shares of Sterlite Technologies, 35 lakh shares of Elgi Equipment, 34 lakh shares of Dishman Carbogen Amcis, 12 lakh shares of JK Paper, 8 lakh shares of Aditya Birla Sun Life AMC, 6 lakh shares each of TCNS Clothing and Mahanagar Gas (MGL) as well as 5 lakh shares each of Mazagon Docks and Chennai Petroleum.

What is the gist of the story that emerges from September 2022 mutual fund churn data? In the large caps, there is a shift out of the global stories to domestic driven stories. There is still a lot of alpha hunting that is happening in the mid-caps and the small caps. Apparently, mutual funds are still finding the risk-reward favourable, apart from strong inflows.

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