The Indian mutual fund industry reported a growth of 2.7% sequentially, after witnessing two successive sequential declines of 4.1% and 1.6% in January and December, respectively. It was mainly on account of positive inflow by the financial institutions and stabilization in the equity market. In February, the industry’s average asset under management (AAUM) stood at Rs7.8 trillion, an increase of Rs20,200 crore.
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The top 10 fund houses cumulatively posted a growth of 2.4% sequentially in AAUM however; the growth was submissive relative to the industry growth. Reliance mutual fund witnessed a monthly decline of 1.3% but continues to hold the top position. The other two fund houses, which witnessed a decline in their AAUM, were LIC mutual fund (down 2.1% sequentially) and SBI mutual fund (down 1.5% sequentially). Kotak Mahindra mutual fund outperformed the industry and the top firms by reporting a growth of 9.7% sequentially. Peerless mutual fund made its debut with an average corpus of Rs120 crore and positioned itself at 36 within the universe of 38 fund houses.
In February, positive inflows were witnessed across all categories. Income and equity funds witnessed a net inflow of Rs4,890 crore and Rs1,510 crore, respectively. Although the income fund category witnessed a positive inflow, it was relatively lower than the previous month. The equity funds category witnessed relatively higher inflows (up 54% sequentially) compared with the previous month.
Domestic fund houses were bullish on power generation, oil and cement companies. NTPC Ltd, Adani Power Ltd and GVK Power and Infrastructure Ltd were among the top 10 companies bought in February from the power space. However, fund houses have been underweight on fast-moving consumer goods, realty and telecom companies. ITC Ltd and Dabur India Ltd were among the top 10 sold companies. In the telecom space, Bharti Airtel Ltd continues to be one of the top sold stocks among funds. DSP BlackRock and Reliance mutual fund offloaded 5.8 million of Bharti Airtel shares. Crompton Greaves Ltd was the top sold scrip in terms of volume as fund houses offloaded about 31.5 million of shares in February.
Foreign Institutional Investors (FII) and domestic mutual funds remained buoyant in the debt market during the Budget month. They bought debt securities worth Rs3,150 crore and Rs11,970 crore, respectively. However, in the equity market, both firms espoused a different approach. Mutual funds continued to remain net sellers for the last six months and offloaded equities worth Rs690 crore in February, whereas FIIs, unlike last month, bought equities worth Rs1,220 crore in February.
Among the top 12 fund houses, cash levels increased by Rs800 crore within equity schemes. On an average, top fund houses maintained a cash cushion of 6.9% of the total equity corpus in February. Out of the top 12 fund houses, six increased their cash holdings. At present, ICICI Prudential mutual fund has maintained maximum cash cushion among peers.
Graphics by Ahmed Raza Khan/Mint