Mutual Fund Update: Sectors and companies in focus in November 2019

The Indian equity market is trading at its lifetime high and mutual fund investors, instead of putting in more money, have capitalised on this market rally and booked profit. Therefore, there was moderation in the domestic mutual fund inflow in November, 2019. Inflows into equity mutual fund remained subdued and were one of the lowest in the last seven months, standing at less than Rs 1,000 crore. What saved the day was strong inflows through systematic investment plan (SIP) which stood at Rs 8,273 crore for November.

Major Trends in sector and company exposure:

Sector

The weightage of Capital goods touched an all-time low among mutual fund schemes, reflecting that they are not bullish on investment cycle recovery. For November 2019, their share dropped by 70 basis points on monthly basis and was to the tune of 6.9 per cent. In addition to capital goods,  the consumer goods, technology, oil & gas, retail, automotive, and the utilities sectors saw a fall in thier holdings.

Sectors that saw improvement in the weight or in which mutual funds have increased their weightage, are NBFCs, telecom, banks, cement, healthcare, and metals. PSU banks remained one of the favourite and their weight increased for the third successive month to hit a four-month high of 4.3 per cent.

Company

When it comes to the individual companies, the financials remained the preferred lot and 5 of the top 10 stocks were from financials. State Bank of India, HDFC, Bajaj Finance, HDFC Bank, and ICICI Bank remained the favourites among investors. Bharti Airtel and Maruti Suzuki were the stocks, where maximum number of MF schemes has shown interest and 11 and

17 mutual fund schemes were net buyers in the company’s share.

Companies, wherein MF schemes have lowered their interest, are capital good heavy weight L&T, software major TCS, IOC, ITC, and HPCL.