MF Update: Movers & Shakers of November 2020

The benchmark equity index-Nifty 50 crossed 13,000 for the first time in November 2020. In the month of November 2020, it gained as much as 11.4 per cent. The trend of better demand from the festive season along with better-than-expected corporate earnings and strong FIIs inflows helped the Indian equity market to gain.

The total AUM of the domestic mutual fund industry rose 6.3 per cent on monthly basis and reached to Rs 30 lakh crore at the end of November 20. This was led by both, an increase in the AUM of equity funds as well as debt funds.

In the equity, though there was a net outflow of around Rs 13,000 crore (the fifth consecutive month of outflows and all sub-category saw an outflow in the month of November 2020), AUM increased due to mark to market gain.

Equity AUM crossed Rs 8 lakh crore and reached Rs 8.57 lakh crore at the end of November 2020, showing a gain of 10.4 per cent MoM. In the debt category, all sub-categories saw a net inflow in the month of November, and eventually, their AUM reached Rs 13.87 lakh crore.

Sector-wise movement

The banking sector led the last leg of the rally in the equity market. It was clearly visible in the buying interest of MFs. According to a report by Motilal Oswal (Fund Folio), MFs showed an interest in the private banks, NBFCs, PSU Banks, capital goods, metals, and automobiles, leading to a sequential rise in their weight in MF portfolio. Oil & Gas, technology, consumer, healthcare, chemicals, telecom, cement, utilities, and retail reported an MoM decrease in weight.

Private banks’ weight increased for the second consecutive month to 18.7 per cent, an increase of 130 bps MoM. It became the top sector holding for MFs in November 2020, followed by technology (11 per cent), NBFCs (8.9 per cent), and healthcare (8.1 per cent). NBFCs’ weight increased for the second consecutive month to a nine-month high of 8.9 per cent, an increase of 70 bps on a sequential basis. The sector now ranks third in the allocation of mutual funds while it ranked sixth, a month back.

In terms of sector, Consumer’s weight moderated for the sixth consecutive month to a 17- month low of 7.9 per cent. Oil & Gas’ weight hit a nine-month low of 7.6 per cent, slipping to the sixth position in the MF allocation.