March 2021 was special for MF flows?
Before we get into the nuances of what the big funds bought, let us take a quick look at how flows into equity funds panned out in the last few months and why March 2021 was a special way in more ways than one. Actually, there are two reasons.
Firstly, equity funds saw net inflows of Rs9,115cr in Mar-21. That virtually negates the trend of the 8 months prior to Mar-21 since equity funds had been seeing net redemptions since July last year. Equity funds saw outflows of over Rs50,000cr between Jul-20 and Feb-21. That situation reversed with net inflows of Rs9,115cr in Mar-21.
The other shift in Mar-21 was the quantum leap in SIP flows. While SIP flows have sustained above Rs7,000cr per month for some time now, Mar-21 recorded the highest ever SIP inflow of Rs9,182cr. This is significant as SIP flows typically represent retail equity flows.
It is in this background that we will look at what the top funds bought and sold in the month of March 2021. We look at SBI MF, HDFC MF and ICICI Pru MF. There is a small chip here. We will only look at mid-cap stocks and avoid large cap stocks altogether as it is in these mid-caps that stock selection or de-selection really comes into play.
Mid cap stocks that SBI MF churned in Mar-21
With an overall AUM of Rs5.05 trillion, SBI remains the most formidable MF player in India by a margin. What is more formidable is that more than 50% of its AUM comes from equity fund AUM, which stands at Rs2.63 trillion.
During the month of Mar-21, SBI MF bought into stocks like Max Healthcare, Wabco, AU Small Finance and CESC. Among the slightly larger stocks it also bought Adani Enterprises, JSPL and Yes Bank. SBI MF was also active in the IPO scene lapping up stocks like Laxmi Organics, Nazara Technologies and Barbeque Nation from the IPO market.
Let us also look at the stocks that SBI MF exited. It got out of TN Paper and V2 Retail. Most retail stocks have been under strain due to social distancing norms after the resurgence of COVID. SBI MF also exited RITES, which has come under some pressure due to many of its proposed projects getting held up. After the sharp rally in the last few months, Dr. Lal Pathlabs was another stock the SBI MF exited in Mar-21.
Mid cap stocks that HDFC MF churned in Mar-21
The second largest fund with an AUM of Rs4.16 trillion, HDFC AMC still remains one of the key opinion makers in equity markets. It has an equity AUM of Rs1.56 trillion representing 37% of its overall AUM.
In Mar-21, HDFC MF purchased auto component maker Varroc in large quantities as well as Tata Communications as part of the government divestment. Like SBI MF, even HDFC MF bought into Max Healthcare and Wabco, apart from stocks like CRISIL, Inox Wind and Havells. HDFC MF was also active in the IPO market and picked up stakes in successful IPOs in recent times like Barbeque Nation, Hyderabad based MTAR Technologies and gaming company, Nazara Technologies.
Among the mid-caps that HDFC MF exited were names like Vodafone Alkyl Amines and Siti Networks. The fund also got out of Indraprastha Gas and TVS Motors. In the light of the sharp fall in gold prices and the likelihood of stress on the asset quality and collateral quality of gold loan companies, HDFC AMC also trimmed exposure to Manappuram Finance.
Mid cap stocks that Pru ICICI MF churned in Mar-21
ICICI Prudential still remains a formidable name with overall AUM of Rs4.1 trillion and an equity AUM of Rs1.21 trillion. The equity representation is much lower at 29% in the case of ICICI Pru AMC.
For ICICI Pru, it was more like an IPO game. While it did add Den Networks and Max healthcare in Mar-21, the rest were IPOs including Easy Trip, Craftsman Automation, Laxmi Organic, MTAR, Barbeque Nation and Nazara Technologies. ICICI Pru did exit from two IPOs it had invested in earlier viz. Indigo Paints and Rossari Biotech after both did extremely impressively post listing.
In short; Mar-21 was a month of smart churning in mid-caps but the action was largely focused on the mid-cap IPOs that hit the market.