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MUMBAI : Fund managers in India continued their penchant for metal shares in July, while paring their holdings of oil & gas stocks. Inflows into equity schemes hit a new high in July, underscoring investor bets on sustained demand for commodities with the global economy gradually emerging from the covid-19 pandemic.

In July, mutual funds scaled their weightage in metals to a 33-month high of 3.4%, an increase of 1.3 percentage points from a year ago and 50 basis points (bps) sequentially, showed data from the Association of Mutual Funds in India (Amfi) and mutual fund database NAV India analysed by Motilal Oswal Financial Services Ltd.

Recalibrating bets
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Recalibrating bets

The review includes data for India’s top 20 domestic mutual fund houses, which together command nearly 97% of the industry in terms of assets under management (AUM). “On a month-on-month basis, the weights of metals, cement, real estate, chemicals, telecom, textiles and retail increased, while the weights of oil & gas, private banks, automobiles, utilities, consumer, and technology moderated. Private banks (16.8%) was the top sector holding for mutual funds in July, followed by technology (11.7%), healthcare (7.7%), and non-banking financial companies (NBFCs) (7.4%)," said Deven Mistry, analyst, Motilal Oswal Financial Services.

The weightage of the oil & gas sector plunged to a 48-month low of 6.4% in July, falling 50 bps sequentially and 340 bps from a year earlier. Similarly, fund managers also dumped shares of private banks, reducing weightage of the sector for the second straight month to 16.8%, down 30 bps sequentially but up 40 bps from a year earlier.

The Nifty Metal Index jumped nearly 11% in July, outpacing a meagre 0.3% rise in the benchmark index Nifty. The Nifty Private Bank Index was down 1.74%, while the Nifty Oil&Gas Index shed 3.50% during the month.

As stock markets continued to score record highs, defying talks of elevated valuations, net inflows into equity mutual fund schemes galloped to a new high in July, rising almost six times in a month.

According to data released by the Association of Mutual Funds in India (Amfi), July saw a net inflow of 20,742.77 crore into equity schemes, a 350% jump from 4,608.75 crore in June. New fund offers (NFOs) by mutual fund houses during the month also contributed to the jump in inflows. The contribution of monthly systematic investment plans (SIP) hit a record 9,608.86 crore in July from 9,155.84 crore in the previous month.

According to Edelweiss Securities, mutual funds deployed a record 5,900 crore in initial public offerings (IPOs). “Mutual funds participated enthusiastically in the recent IPOs—Zomato Ltd ( 4,450 crore ), G R Infraprojects Ltd ( 1,083 crore), Tatva Chintan Pharma Chem Ltd ( 210 crore ), Rolex Rings Ltd ( 142 crore)," said Abhilash Pagaria, analyst, Edelweiss Securities.

Major additions by mutual funds in July were Zomato, HDFC Bank, ICICI Bank, Bajaj Finance, NMDC, ITC, GR Infraprojects, and Axis Bank while cutting exposure in Infosys, Kotak Mahindra Bank and Grasim Industries, showed analysis by Edelweiss Securities.

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