MF Update: SIP contribution declines for third successive month in June

The benchmark indices in the Indian equity market increased by around eight per cent in the month of June 2020 and crossed the psychological mark of 10,000 in Nifty. The equity AUM followed the suit and saw a 7.7 per cent jump during the same period. The increase was primarily led by a mark to market gain as net inflows into equity MF schemes saw a huge decline on a monthly basis. The monthly inflows into equity schemes in the month of June 2020 were to the tune of Rs 240 crore, which is the lowest in four years.   

One of the main contributors to equity inflows, SIPs are showing signs of moderation and decline for the third successive month to Rs 7,917 crore, down by 2.4 per cent sequentially. It slipped below Rs 8,000 crore mark for the first time since November 2018.

Sector movement

There were some important changes in the sectoral allocation of funds. On a sequential basis, the weights of Oil and Gas, Non-banking financial companies (NBFCs) and Banks (both private and public) increased while that of Healthcare, Utilities, Technology, Consumer, Capital Goods, Cement and Chemicals moderated. Oil and Gas’ weight increased 60 bps MoM to 9.4 per cent and climbed a new high. The sector has climbed back to the third position in the allocation of mutual funds. The weight of the Healthcare sector declined by 50 basis points on a monthly basis after rising for five consecutive months to 7.8 per cent.

Stock movement

When it comes to the stock, six of the top-10 favoured stocks by mutual funds were from Financials. The most favoured banks were HDFC Bank, Kotak Mahindra Bank, Bajaj Finance, ICICI Bank, SBI and SBI Life Insurance. Stocks that were out of favour among MFs were Larsen & Toubro, ONGC, NTPC, Coal India and Cipla.