iifl-logo-icon 1
IIFL

Invest wise with Expert advice

By continuing, I accept the T&C and agree to receive communication on Whatsapp

  • Open Demat with exclusive Advice & Services
  • Get a dedicated Relationship Manager to help you grow your wealth
  • Exclusive advisory on 20+ trading & wealth-based investment options
  • One tap Investments, Automated trading & much more
  • Minimum 1 lakh margin required
sidebar image

How MFs churned stocks and sectors in April 2024

26 May 2024 , 10:54 PM

How MFs churned stocks and sectors in April 2024

Teaser Telecom was the obvious favourite in April led by Bharti Hexacom, Vodafone Idea, and Indus Towers
Tag Words #MutualFunds #MF #LargeCaps #MidCaps #SmallCaps

APRIL 2024 – AN EVENTFUL MONTH FOR EQUITY FUND FLOWS

To put in a nutshell, the situation in April was almost a reverse of March, with debt funds infusing funds aggressively, predominantly into liquid funds and other short term funds. For the month of April 2024, mutual funds overall saw net inflows of ₹2.39 Trillion, largely led by ₹1.89 Trillion of inflows from debt funds. Equity fund net inflows at ₹18,888 Crore in April 2024, was lower than ₹22,567 Crore in March 2024 and progressively lower compared to February 2024. Within the equity fund theme, flexi cap funds, multi-cap funds and sector funds saw bulk of the inflows. The good news is that small cap funds are back to seeing net inflows while investors appear to prefer large & mid-cap funds over large cap funds.

Let us now turn to the sources of inflows into mutual funds in April 2024. Let us talk about the NFOs first. The total NFO flows in April 2024 were tepid at ₹1,532 Crore, of which active equity funds collected ₹1,269 Crore in the month. The bulk of the flows into equity funds cam from the systematic investment plans (SIPs), which saw record flows of ₹20,371 Crore into SIPs in April 2024. This is the highest ever SIP flows recorded in any month till date. The average monthly SIP flows are up nearly 6-fold in the last 8 years, which is huge. All this translated into domestic mutual funds turning net buyers in Indian equities to the tune of ₹32,824 Crore in April 2024. This was lower than ₹44,233 Crore of MF net investment in equities in March 2024, but it was good enough to offset the FPI selling in the month.

APRIL 2024 – WHICH STOCKS DID INDIAN MUTUAL FUNDS PREFER?

One must remember that ₹32,284 Crore of infusion by mutual funds into equities on a net basis, is nearly $4 Billion. That is big enough to create an impact. But, what are the stocks that the mutual fund bought and sold in the month of April 2024. The MF buying was largely driven by IPOs in the month of April. Here is a quick summary.

  • The most preferred stock in April was Bharti Hexacom Ltd, which came out with its IPO during the month of April 2024. The company saw total investments from mutual funds to the tune of ₹3,276 Crore in the IPO and also post listing. Among the major buyers of Bharti Hexacom were ABSL MF (₹80 Crore), Axis Mutual Fund (₹295 Crore), Bandhan Mutual Fund (₹31 Crore), Baroda BNP Paribas MF (₹20 Crore), DSP Mutual Fund (₹30 Crore), Edelweiss MF (₹37 Crore), Franklin Templeton (₹162 Crore), HDFC Mutual Fund (₹229 Crore), HSBC Mutual Fund (₹64 Crore), ICICI Prudential MF (₹152 Crore), Invesco Mutual Fund (₹67 Crore), Kotak Mutual Fund (₹919 Crore), LIC Mutual Fund (₹21 Crore), Mahindra Manulife MF (₹144 Crore), Mirae AMC (₹140 Crore), Motilal Oswal MF (₹31 Crore), Nippon India MF (₹68 Crore), PGIM India MF (₹26 Crore), SBI Mutual Fund (₹397 Crore), Sundaram Mutual Fund (₹182 Crore), Tata Mutual Fund (₹39 Crore), Union Mutual Fund (₹17 Crore), UTI MF (₹130 Crore), and Whiteoak Mutual Fund (₹31 Crore).
  • The second most preferred stock in April 2024 was JNK India, another IPO during the month. The stock saw net buying by mutual funds to the tune of ₹535 Crore. Among the major funds buying into JNK India Ltd were Bandhan Mutual Fund (₹1.30 Crore), JNK India (₹201 Crore), Edelweiss MF (₹9 Crore), HDFC Mutual Fund (₹77 Crore), Kotak Mutual Fund (₹146 Crore), Mirae AMC (₹31 Crore), and Nippon India MF (₹41 Crore),
  • The third most preferred stock for mutual funds in April 2024 was Nirlon Ltd. The stock saw mutual fund net buying of ₹189 Crore overall. Among the major funds buying into Nirlon Ltd included ICICI Prudential Mutual Fund (₹189 Crore).

HOW MF SECTORAL PREFERENCES SHIFTED IN APRIL 2024?

Before we get into sectoral preferences of equity funds in the Indian context in the month of April, it is important to understand the composition of the equity funds universe in India. In India, equity stocks are owned predominantly by active equity funds. Currently, active equity funds hold Indian equities to the tune of ₹24.74 Trillion (net AUM) as of the close of April 2024. The table below captures the active fund break up as of April 2024.

Active Equity
Fund Categories
No. of Folios
(Absolute)
Net Inflows
(₹ in Crore)
Net AUM
(₹ in Crore)
Multi Cap Fund 62,83,413 2,723.87 1,34,861.19
Large Cap Fund 1,38,58,639 357.56 3,21,048.10
Large & Mid Cap Fund 94,58,793 2,638.91 2,18,060.95
Mid Cap Fund 1,43,80,224 1,793.07 3,16,222.62
Small Cap Fund 1,94,02,862 2,208.70 2,66,109.75
Dividend Yield Fund 9,01,907 341.35 25,216.76
Value Fund/Contra Fund 63,48,393 1,986.73 1,57,945.53
Focused Fund 50,87,570 -328.04 1,33,904.73
Sectoral/Thematic Funds 1,90,67,350 5,166.05 3,13,693.78
ELSS 1,62,28,330 -144.04 2,22,263.37
Flexi Cap Fund 1,45,35,204 2,172.93 3,64,996.67
Total Active Equity Funds 12,55,52,685 18,917.09 24,74,323.47

Data Source: AMFI

As you can see in the table above, the active equity funds have a total of 12.56 Crore folios while they manage a total AUM of ₹24.74 Trillion on a net basis. However, when we look at sectoral preferences, we don’t look at only the active equity funds, but also the equity holdings in hybrid funds and the substantial equity holdings of index funds and index ETFs, which are basically passive replications of an underlying index. The total equity holdings of the hybrid funds and passive funds in India comes to ₹8.14 Trillion, taking the total value of equity holdings as of April 2024 to ₹32.88 Trillion.

We shall now look at how the sector preference of Indian holdings shifted; both in terms of the absolute change in value and also in terms of percentage change. This would be fair to the largely represented sectors and the smaller sectors. Let us first look at sectoral shifts in the holdings of Indian mutual funds in absolute value terms. We will only look at the top 10 sectors in terms of absolute change in holding value.

Top 10
Sectors
MCAP-MAR-24
(₹ in Crore)
MCAP-APR-24
(₹ in Crore)
MOM Change
(₹ in Crore)
MOM Change
(in % terms)
Banking & Finance 9,43,922 10,07,245 63,323 6.71%
Capital Goods 1,18,131 1,34,396 16,265 13.77%
Metals & Mining 1,07,412 1,22,661 15,249 14.20%
Auto & Auto Ancillaries 3,07,756 3,22,663 14,907 4.84%
Telecom 88,577 1,01,748 13,171 14.87%
Power 1,02,156 1,14,359 12,203 11.95%
Consumer Durables 60,273 70,415 10,142 16.83%
Oil & Gas 2,24,884 2,31,632 6,748 3.00%
FMCG 1,67,892 1,72,828 4,936 2.94%
Chemicals & Fertilizers 87,363 91,896 4,533 5.19%

The above data is the absolute growth in the market cap between March 2024 and April 2024 on a sector-wise basis. It must be remembered that this shift is not just by flows but also from value accretion. It is a combination of these two factors. In the above case, the MOM absolute growth is led by banking and financial services, which is hardly a surprise considering the heft that they have in the overall index. However, the subsequent list of industries give us interesting insights into the nature of industry of shifts happening.

For instance, capital goods has seen substantial accretion and the interest appears to be emanating from the expectations of a revival in the capital investment cycle. Metals and mining is another sector that is attracting a lot of value accretion for mutual funds. That is based on the hopes that metals prices will rally on the back of strong demand from China and strong domestic demand in India. Auto and ancillaries have been a mutual fund favourite for a long time. That is a bet on the revival in rural demand and the shift to EVs.

There were some value losers too in the month of April. IT services saw the maximum value loss in absolute terms, followed by infrastructure and diamonds. Let us now shift tack to the percentage gainers in sectoral exposure.

Top 10
Sectors
MCAP-MAR-24
(₹ in Crore)
MCAP-APR-24
(₹ in Crore)
MOM Change
(₹ in Crore)
MOM Change
(in % terms)
Paper 659 773 114 17.30%
Consumer Durables 60,273 70,415 10,142 16.83%
Telecom 88,577 1,01,748 13,171 14.87%
Metals & Mining 1,07,412 1,22,661 15,249 14.20%
Capital Goods 1,18,131 1,34,396 16,265 13.77%
Plastic Products 15,149 17,035 1,886 12.45%
Power 1,02,156 1,14,359 12,203 11.95%
Abrasives 9,595 10,668 1,073 11.18%
Realty 41,925 46,079 4,154 9.91%
Alcohol 19,942 21,906 1,964 9.85%

The percentage gains segment in April 2024 throws light on smaller sectors in terms of MF holdings. Paper saw demand while consumer durables and telecom also showed mutual fund interest in the month of April 2024. Otherwise, metals and capital goods figure in the top in terms of percentage accretion in holding value also. That broadly summarizes the story of sector shift in mutual fund holdings in the month of April 2024.

APRIL 2024 THEME – WHICH FUNDS BOUGHT / SOLD MOST DEFENCE STOCKS?

Defence has been an attractive theme for institutional, HNI and retail investors alike. That is hardly surprising considering that global spending on defence is only likely to increase. But, the India defence story is much bigger. The government has made a big effort to in-source defence manufacture and in addition, Indian defence exports have bene growing geometrically over the last few years. Obviously, there has been was a good deal of mutual fund action in the defence stocks in April 2024. Here is a quick summary.

  • During the month of April 2024, Baroda BNP Paribas Fund added 1.25 Lakh shares of Bharat Dynamics worth ₹24.7 Crore.
  • Canara Robeco MF added 1.55 Lakh shares of Mazagon Dock Shipbuilders worth ₹36.50 Crore in April 2024.
  • Franklin Templeton MF was a seller in Defence in April 2024. IT sold 4.33 Lakh shares of Bharat Forge worth ₹48.90 Crore. BFL has a strong defence franchise too.
  • In contrast HSBC Mutual Fund was a buyer in Bharat Forge Ltd to the tune of 10.59 Lakh shares worth ₹134.70 Crore and it was the fund’s top purchase in April 2024.
  • ICICI Prudential Mutual Fund bought 4 Lakh shares of Cyient DLM worth ₹27.7 Crore. Cyient DLM listed recently and is into defence and aerospace related services.
  • Invesco Mutual Fund also had defence as its top buy. It bought 5.13 Lakh shares of Cochin Shipyards worth ₹66.90 Crore in the month of April 2024.
  • On the defence and aerospace side, ITI Mutual fund sold 0.54 Lakh shares of Tata Technologies worth ₹5.50 Crore. It is also into defence and aerospace.
  • ITI was not alone in selling Tata Technologies. Even Kotak Mutual Fund sold Tata Technologies 0.75 Lakh shares in April 2024 worth ₹7.70 Crore.
  • Mahindra Manulife Mutual Fund was an aggressive buyer in defence stocks in April 2024. It bought 5.65 Lakh shares of Garden Reach Shipbuilders worth ₹55.90 Crore, 1.41 Lakh shares of BEML worth ₹49.40 Crore, and 12 Lakh shares of Bharat Electronics Ltd (BEL) worth ₹28.1 Crore.
  • PPFAS Mutual Fund bought 4.41 Lakh shares of BHEL for ₹12.40 Crore. BHEL also has a fairly large defence business in its overall portfolio.
  • Quant Mutual Fund bought 1 Lakh shares of BEML in April 2024 at a value of ₹35.10 Crore, but it was also a seller in defence stocks. The fund sold 7.20 Lakh shares of Larsen & Toubro worth ₹271 Crore and also sold 0.90 Lakh shares of Hindustan Aeronautics Ltd (HAL) for ₹29.90 Crore.
  • Recently launched Samco Mutual Fund bought 0.47 Lakh shares of HAL worth ₹18.30 Crore during the month of April 2024.
  • Shriram Mutual Fund also added 2 defence stocks to its portfolio in April 2024. It added 0.44 Lakh shares of Tata Power worth ₹2.00 Crore and 0.10 Lakh shares of Azad Engineering in the month. It sold shares of Cummins Ltd.
  • Trust Mutual Fund also lapped up some of the defence stocks in April 2024. It bought 0.12 Lakh shares of HAL worth ₹4.60 Crore, and shares of Tata Motors and BEL worth ₹4 Crore each in the month.
  • Union Mutual Fund bought 0.43 Lakh shares of Bharat Dynamics Ltd (BDL) worth ₹8.60 Crore in the month of April 2024.

Defence buying in the month of April was seen across the board, although mutual funds continue to be cautious about the recent rally of over 100% in a year and the current valuations of most defence companies in India.

Related Tags

  • LargeCaps
  • MF
  • midcaps
  • MutualFunds
  • smallcaps
sidebar mobile

BLOGS AND PERSONAL FINANCE

Read More

Most Read News

Indices end lower
21 Jun 2024|03:40 PM
Market Update: Nifty and Sensex Dip
21 Jun 2024|01:47 PM
Read More

Invest Right News

BSE: Firing on all cylinders
10 Apr 2024|12:07 PM
Read More
Knowledge Centerplus
Logo

Logo IIFL Customer Care Number
(Gold/NCD/NBFC/Insurance/NPS)
1860-267-3000 / 7039-050-000

Logo IIFL Securities Support WhatsApp Number
+91 9892691696

Download The App Now

appapp
Knowledge Centerplus

Follow us on

facebooktwitterrssyoutubeinstagramlinkedin

2024, IIFL Securities Ltd. All Rights Reserved

ATTENTION INVESTORS
  • Prevent Unauthorized Transactions in your demat / trading account Update your Mobile Number/ email Id with your stock broker / Depository Participant. Receive information of your transactions directly from Exchanges on your mobile / email at the end of day and alerts on your registered mobile for all debits and other important transactions in your demat account directly from NSDL/ CDSL on the same day." - Issued in the interest of investors.
  • KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary.
  • No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account."

www.indiainfoline.com is part of the IIFL Group, a leading financial services player and a diversified NBFC. The site provides comprehensive and real time information on Indian corporates, sectors, financial markets and economy. On the site we feature industry and political leaders, entrepreneurs, and trend setters. The research, personal finance and market tutorial sections are widely followed by students, academia, corporates and investors among others.

RISK DISCLOSURE ON DERIVATIVES
  • 9 out of 10 individual traders in equity Futures and Options Segment, incurred net losses.
  • On an average, loss makers registered net trading loss close to Rs. 50,000.
  • Over and above the net trading losses incurred, loss makers expended an additional 28% of net trading losses as transaction costs.
  • Those making net trading profits, incurred between 15% to 50% of such profits as transaction cost.
Copyright © IIFL Securities Ltd. All rights Reserved.

Stock Broker SEBI Regn. No: INZ000164132, PMS SEBI Regn. No: INP000002213,IA SEBI Regn. No: INA000000623, SEBI RA Regn. No: INH000000248

plus
We are ISO 27001:2013 Certified.

This Certificate Demonstrates That IIFL As An Organization Has Defined And Put In Place Best-Practice Information Security Processes.