Mutual funds net sellers in 82% Nifty stocks in December2 min read . Updated: 14 Jan 2021, 12:23 PM IST
- Equity MFs have seen continuous outflow in the past six months as investors chose to put their money in IPOs, which saw record investor participation, and also directly into stocks
MUMBAI: Mutual funds were net sellers of 82% Nifty stocks in December, at a time when the benchmark index rose nearly 8%, as per data sourced from Association of Mutual Funds in India (Amfi) and NAV India analysed by Motilal Oswal Financial Services Ltd. This assumes significance as equity mutual funds have been under constant redemption pressure for the past six months.
The review includes India’s top 20 domestic mutual fund houses which command nearly 97% of the industry in terms of assets under management (AUM).
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Among Nifty stocks, Eicher Motors (up 4.3%), Tech Mahindra ( up 3.1%), Dr Reddy’s (up 2.8%), HCL Tech (up 2.7%) and Axis Bank (up 2.2%) were top buys of mutual funds in December. Stocks like UPL (down 13.6%), SBI Life Insurance (down 12.3%), Ultratech Cement (down 8.8%), Tata Steel (down 8.2%), and Adani Port & SEZ (down 8.1%) were Nifty stocks in which mutual funds reduced their stake most in the month.
In December, mutual funds had maximum holdings in private bank stocks with 18.2% exposure followed by technology (11.7%), NBFCs (8.9%) and healthcare (8.1%). Cement, oil & gas, automobiles and chemicals saw a decrease in weightage by mutual funds.
“Investors capitalised on the market rally to book profits and rebalance the portfolio as markets continue to achieve new highs, leading to moderation in domestic mutual fund net inflows. The year saw a notable change in the sector and stock allocation of funds. Defensives’ weight increased by 650 basis points to 33.9%, led by an increase in the weights of technology, healthcare, and telecom," Deven Mistry, research analyst, Motilal Oswal Financial Services, said.
Net outflow from equity mutual funds rose to a record ₹13,121 crore in December, topping the ₹13,004 crore worth of outflows in the previous month, according to data from Amfi.
Total redemptions in equity schemes stood at ₹36,220.28 crore in December, the highest since March 2018. Equity mutual funds have seen continuous outflow in the past six months as investors chose to put their money in IPOs, which saw record investor participation, and also directly into stocks.
Domestic institutional investors have also been consistently selling stocks. They sold a net of ₹37,293.5 crore in December after a record ₹48,319.17 crore sell-off in November.
“Interestingly two key mutual funds (ICICI Prudential MF and HDFC AMC) have reduced stake significantly in Vedanta in December month. There is a good possibility of them reducing stake to the promoters via block deal which happened last month at ₹160 per share in which promoters bought 4.98% of the equity," Abhilash Pagaria, analyst, Edelweiss Securities Limited said.