NEW DELHI: After falling by 1.6 per cent in January 2019, equity assets under management (AUM) of Indian mutual funds declined marginally by 0.1 per cent month-on-month (MoM) to Rs 8.3 lakh crore in February, owing to bleak market sentiment, said a Motilal Oswal Financial Services report.
Indian benchmark indices ended flat (-0.4 per cent MoM) for the third consecutive month, as Dalal Street exercised caution amid a flurry of unsupportive domestic and global cues.
Total AUM of the mutual fund industry declined by 0.9 per cent MoM to Rs 23.2 lakh crore in February, primarily led by a decrease in AUM of liquid funds (by Rs 21,200 crore), balanced fund (Rs 2,800 crore), income funds (Rs 1,700 crore) and equity funds (Rs 1,000 crore).
Redemptions declined by 8.1 per cent MoM to Rs 14,500 crore, but an even higher fall in equity scheme sales (-8.2 per cent MoM to Rs 19,200 crore, lowest in two years) led to a decline in net inflows from Rs 5,100 crore in January to Rs 4,600 crore in February.
The report further said that mutual have been adding shares of oil and gas companies such as GAIL, HPCL, BPCL and ONGC over the last few months, encouraged by cheap valuations.
Equity schemes have increased their oil and gas sector weight for the fourth successive month in February 2019 to reach a new high of 7.8 per cent, a rise of 20 basis points from January, and 120 basis points from February 2018. The sector is now at the fifth position regarding allocation of mutual funds; it was ranked seventh last year.
Private Banks (18.6 per cent) was the top sector holding in February, followed by technology (9.5 per cent), NBFCs (8.4 per cent) and Consumer (8.1 per cent).
As per the report, Axis Bank was one of the preferred stocks among mutual funds during the month, with net buying by 19 funds. Kotak Mahindra Bank was another, with net buying by 15 funds.
Among the top 25 schemes by AUM, those registering the rise last month were: Axis Focused 25 Fund (+2.2% MoM change in NAV), Axis Long Term Equity Fund (+2.1% MoM change in NAV), UTI-Equity Fund (+0.7% MoM change in NAV) and Franklin India Bluechip Fund (+0.1% MoM change in NAV). However, 84 per cent of top-25 schemes close lower MoM.