The last few months have been robust for mutual fund flows. While debt fund flows may have been mixed; equity funds, hybrid funds and passive funds saw consistent inflows. But the big data point was SIP flows. In the first 10 months of FY22, SIP flows already crossed the Rs100,000cr mark with the monthly flows averaging above Rs11,000cr. It is a clear indication of a massive retail build-up of appetite for mutual fund investing.
However, it is not just about the quantum of flows, but also the folio counts. In the month of Jan-22, the total SIP folios crossed the 5 crore mark for the first time. Apparently, a good number of millennials and recent entrants adopted the SIP route to investing in mutual funds. Notwithstanding the gyrations in the Nifty and Sensex and the volatility in FPI flows; SIPs flows were steady and consistent. That signals MF investing coming of age in India.
The logical question is; what are the mutual funds doing with all this money. What are the stocks they are buying and selling? For better granular understanding we break companies into large caps, mid-caps and small caps. One consistent trend in last few months was that fund managers used volatility in markets to churn portfolios in sync with emerging ideas.
Large cap stocks that mutual funds bought and sold in Jan-22
Let us begin with large caps. AMFI defines large caps based on the ranking by market capitalization. Here is how it is done. The entire universe of stocks across NSE and BSE are ranked descending on market capitalization. The top 100 stocks ranked by market capitalisation are classified as large cap stocks for the purpose of MF classification. Here are the major large cap stocks mutual funds bought and sold last month.
In Jan-22, mutual funds overall added 139 lakh shares of Tata Power, 105 lakh shares of Tech Mahindra and 85 lakh shares of IndusInd Bank. If Tata Power was a bet on renewable energy, then Tech Mahindra had the most attractive valuations in the IT space. IndusInd attracted interest on hopes of stake increase by the promoters. Apart from these, mutual funds also added 78 lakh shares of Vedanta, 38 lakh shares of Havells, 31 lakh shares of Dabur, 12 lakh shares of Apollo Hospitals and 18 lakh shares of Interglobe Aviation.
Let us now turn to the large cap selling. Not surprisingly, about 449 lakh shares of Zomato were sold, 292 lakh shares of SAIL and 75 lakh shares of Indus Towers were sold in Jan-22. Mutual funds also sold 14 lakh shares in HDFC AMC, 59 lakh shares in JSW Steel, 12 lakh shares in Berger Paints and 62 lakh shares of Tata Consumer Products. Overall, Jan-22 saw a fairly robust churn with a bias against metals and digital plays.
Mid-cap stocks that mutual funds bought and sold in Jan-22
How are mid-caps defined in the case of mutual funds? If the top 100 stocks by market capitalization are classified as large cap stocks, then the 101st to the 250th ranks are classified as mid-cap stocks. Here are the key mid cap stocks that mutual funds bought and sold last month.
In Jan-22, mutual funds overall added 697 lakh shares of PNB, 129 lakh shares of Zee Entertainment and 115 lakh shares of Bandhan Bank. Zee has been attracting a lot of buying interest on the Sony deal. Funds have also been looking at smaller banks that have corrected sharply like PNB and Bandhan Bank. Apart from these, mutual funds also added 47 lakh shares of Tata Communication, 90 lakh shares of LIC Housing, 70 lakh shares of Aditya Birla Capital, 37 lakh shares of Prestige Estates and 19 lakh shares of Tata Chemicals.
Let us now turn to the major mid-cap selling in Jan-22. About 214 lakh shares of GMR Infra were sold, 131 lakh shares of NMDC and 66 lakh shares of Bank of India were also sold in Jan-22. Mutual funds also disposed of 14 lakh shares each in Colgate Palmolive and Deepak Nitrite, 17 lakh shares in Laurus Labs and 9 lakh shares of ICICI Securities. Overall, Jan-22 saw a robust churn with a bias against pharma and infrastructure plays.
Small cap stocks that mutual funds bought and sold in Jan-22
On the market capitalization pecking order, the stocks ranked 251st and lower are classified as small caps by AMFI. Here are the key small cap stocks that mutual funds bought and sold last month.
In Jan-22, mutual funds added 335 lakh shares of IDFC, 177 lakh shares of NBCC, 91 lakh shares of Indiabulls Housing and 94 lakh shares of Hindustan Copper. The theme, as is the case with small caps, was largely stock specific. If IDFC stood the chance of merging with IDFC First Bank, Indiabulls Housing had a change in management. Mutual funds also added 31 lakh shares of Rain Industries, 24 lakh shares of Welspun Corp, 11 lakh shares of Neogen Chemicals, 9 lakh shares of Just Dial and 12 lakh shares of Religare Enterprises.
Let us now turn to the small-cap selling in Jan-22. About 156 lakh shares of Hathaway Cable & Datacom were sold in January, 44 lakh shares of Oriental Hotels and 40 lakh shares of MRPL were sold in the month. Mutual funds also sold 15 lakh shares in Amara Raja Batteries, 29 lakh shares in Granules India, 11 lakh shares in Latent View Analytics and 36 lakh shares of PTC India. The selling was quite heavy on recent IPO listings.
To sum it up, the month of Jan-22 saw a rush for quality and a rush to churn portfolios in sync with the emerging valuation intensive themes.