Mutual funds tank up on financial services and retail stocks

  • Mutual funds raised stakes in the financial services sector as economic activity and consumer demand picked up in July.
  • Research reports suggest that the sharp rally in July led to profit booking by mutual funds and investors alike.
  • Overall, the Indian mutual fund industry has ₹37.8 lakh crore of assets under its management.
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Mutual funds continued to plough in money into equities in July, after making purchases of nearly $2 billion in June. And, they are betting on financial services firms the most, as their stake in the overall mutual fund holdings increased to 31.56% from 30.56% in July.

According to data from AMFI and ICICI Direct, mutual funds invested over $1 billion in July, and their biggest purchases included Zomato, HDFC Life Insurance, and United Phosphorus, among others.

Zomato’s purchases came after the stock experienced a major correction after the lock-in period ended in July,
resulting in a 22% correction.

Another interesting entry into the list is Wipro, which
missed analyst estimates in terms of growth and margin. Its rivals TCS and Infosys have seen mixed movements, with some fund houses paring their stakes while others have added.

Overall, the Indian mutual fund industry invested ₹8,900 crore into Indian equities in July, down from ₹15,500 crore in June.

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“After having seen lows in previous months, the sharp rally in July led to many investors shying away from putting incremental money and few exiting as well during recovery,” said a report by ICICI Direct.

Some other of the biggest names that mutual funds purchased includes Rakesh Jhunjhunwala-backed Star Health and the government-owned National Aluminium Company, among others.

“On a month-on-month basis, the weights of NBFCs, private banks, consumer, retail, automobiles, capital goods, PSU banks, metals, cement, and media increased, while the weights of oil & gas, technology, telecom, healthcare, and utilities moderated,” said a report by Motilal Oswal.

Overall, according to the Association of Mutual Funds in India (AMFI), the total assets under management (AUM) of the Indian mutual fund industry increased to ₹37.8 lakh crore in July 2022 from ₹35.6 lakh crore in June 2022.

There has been a sharp growth in MF AUMs which grew at around 90% in the last five years. In the past decade, AUMs multiplied by over five times, from ₹7 lakh crore in July 2012 to ₹37.8 lakh crore in July 2022.

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Mutual fund activity in the large cap segmentBusiness Insider India / Flourish

Mutual fund activity in the midcap segmentBusiness Insider India / Flourish

Mutual fund activity in the small cap segmentBusiness Insider India / Flourish

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