Large cap, mid-cap, and small caps that MFs traded in March 2023

15 Apr 2023 , 09:20 AM

The mutual fund buying in equities more than compensated for the FPI outflows in FY23. But the big question is where did the mutual funds get this money from? For the mutual funds, inflows came from new fund offerings (NFOs) and from systematic investment plans (SIPs). In short, a lot of money has been flowing into the coffers of mutual funds and let us see in the context of March 2023.

March 2023, another robust month for mutual fund flows

March 2023 marked the 18th consecutive month when the domestic mutual funds were buyers in the Indian equity market. That has more than made up for the heavy selling in Indian equities by the FPIs. Even as the FPIs have been skeptical on India amidst domestic and global headwinds, the mutual funds continue to nibble at stocks at lower levels. However, domestic mutual funds have also been smart churners of their portfolios.

If you look at the month of March 2023, flows into equity funds were Rs20,534 crore. That is a lot of money for mutual fund to juggle in equities as these are the net flows that have come in after redemptions. Also, the volatility provides a number of opportunities for mutual funds to revamp their holdings. In March 2023, Indian mutual funds got SIP inflows of Rs14,726 crore while NFOs collected Rs8,496 crore. That is a lot of money and raises a very pertinent question. Where was all that money being invested? You can get these answers by looking at the portfolio shifts of various mutual funds.

Today, the AUM of mutual funds is around Rs40 trillion and the active equity fund AUM alone is over Rs15 trillion. We are not even counting the equity holdings of hybrid funds and passive funds and if that is added the equity AUM would be well above Rs20 trillion. To get a ringside view of what the mutual funds did in March 2023, we focus on stock shifts at a macro level. What are the large caps, mid-caps and small caps churned in March 2023.

Large cap stocks that mutual funds churned in March 2023

Let us start by defining large caps? For simplicity and for comparison purposes, we stick to the AMFI definition based on market cap rankings. How does AMFI define large caps? Firstly, the combined universe of listed stocks on NSE and BSE are ranked descending based on market capitalization. From this list, the top-100 stocks by market capitalization are classified as large cap stocks. This list is reviewed by AMFI on a half yearly basis to ensure definitions are up to date. Here are major large cap stocks mutual funds bought and sold in March 2023.

Let us start with the mutual fund large cap buys first! Overall, the mutual funds added 1,250 lakh shares of Samvardhana Motherson International, 371 lakh shares of Power Grid, 253 lakh shares of Indian Oil Corporation (IOCL), 182 lakh shares of Tata Motors Ltd, 121 lakh shares of BPCL Ltd, 40 lakh shares of Hindustan Aeronautics Ltd (HAL), 38 lakh shares of Marico Ltd and 18 lakh shares of Interglobe Aviation Ltd (Indigo Airways). Apart from the above, mutual funds added smaller quantities of IRCTC and Bosch Ltd in March 2023. What is of interest is that mutual funds showed a lot of interest in picking up PSU stocks.

We now turn to major large cap selling by mutual funds in March 2023. The selling was prominent in the stocks belonging to the Adani group and the Vedanta group due to the color of news flows. Let us look at the major sell candidates. There was heavy selling of 288 lakh shares in GAIL India Ltd. A total of 140 lakh shares of Vedanta Ltd were sold, apart from 80 lakh shares of Adani Ports and SEZ, 55 lakh shares of Ambuja Cements, 22 lakh shares of SRF Ltd, 21 lakh shares of Hindustan Zinc, 6 lakh shares of Britannia Industries and 4 lakh shares of Adani Green Energy. Apart from these, mutual funds also sold smaller quantities of Adani Transmission and Adani Total Gas in the March 2023.

How MFs traded mid-cap stocks in March 2023

Let us revisit the AMFI methodology to classify a stock as mid-caps? Under the AMFI definition, once the top 100 stocks by market cap are classified as large cap stocks, the 101st to 250th ranked stocks by market cap would qualify as mid-caps. Here are the mid-cap stocks that mutual funds bought and sold in March 2023.

Let us first focus on mid-cap buying in March 2023. Overall, mutual funds added 305 lakh shares of NMDC Ltd, 275 lakh shares of Biocon Ltd, 246 lakh shares of Sona BLW Precision Forgings Ltd, 229 lakh shares of Bharat Heavy Electricals Ltd (BHEL), 196 lakh shares of Devyani International Ltd, 76 lakh shares of HDFC AMC, 35 lakh shares of Piramal Enterprises and 16 lakh shares of Sun TV Network Ltd. In addition, mutual funds added smaller quantities of Star Health and Allied Insurance Ltd and Gillette India too.

We now turn to major mid-cap selling. In March 2023, mutual Funds sold 508 lakh shares of Yes Bank Ltd, 170 lakh shares of IRFC Ltd, 111 lakh shares of GMR Airports Ltd, 101 lakh shares of Max Healthcare Institute, 47 lakh shares of PB Fintech (Policybazaar), 32 lakh shares of Container Corporation, 28 lakh shares of Aditya Birla Capital and 11 lakh shares of Astral Ltd. In addition, the mutual funds also sold smaller quantities of stocks like Patanjali Foods and L&T Technology Services (LTTS) during the month of March 2023.

 

Small cap stock moves of mutual funds in March 2023

We now turn to the small cap stocks. On market cap ranking, the stocks ranked 251st and lower are classified as small caps by AMFI. Here is a quick snapshot of key small cap stocks where mutual funds were active in March 2023. 

In March 2023, mutual funds added 123 lakh fresh shares of Mahindra CIE Automotive Ltd, 115 lakh shares of Kirloskar Oil Engines Ltd, 31 lakh shares of Capri Global Capital, 29 lakh shares of Usha Martin Ltd, 24 lakh shares of Data Patterns India Ltd, 19 lakh shares of Rain Industries Ltd, 16 lakh shares of Home First Finance Company Ltd and 12 lakh shares of Healthcare Global Enterprises. In addition, mutual funds also purchased smaller quantities of small cap stocks including CE Info Systems Ltd and Wonderla Holidays Ltd during the month of March 2023.

Let us conclude with the small-cap selling in the month of March 2023. Mutual funds sold 54 lakh shares of Jagran Prakashan Ltd, 51 lakh shares of Jindal Stainless, 35 lakh shares of Orient Cements Ltd, 20 lakh shares of Quess Corp and 12 lakh shares of SH Kelkar & Company Ltd. In addition, the month of March 2023 also saw mutual funds net selling smaller quantities of stocks like Mahanagar Gas Ltd, IIFL Finance Ltd, Stove Kraft Ltd, TCNS Clothing Ltd and WPIL Ltd.

Finally, for some takeaways from the buying and selling data of mutual funds in the month of March 2023? In the large caps, there is a shift into PSU plays, possibly betting on more favorable PSU policy. In the mid-cap and the small cap space, the shifts are a lot more focused in favour of alpha. However, at a time when the concerns are more at a macro level and about global headwinds, the mutual funds are relying on stock selection and stock churn for alpha.