Auto industry's weightage in mutual fund schemes hits 3.5-year high in June

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The weightage of the industry increased 50 basis points (bps) sequentially and 110 bps year-on-year. The sector now ranks third in the allocation of mutual funds— it was at the fourth spot a month back.

According to the report, in terms of value increase sequentially, four of the top 10 stocks were from the auto industry; Maruti Suzuki, M&M, TVS Motor, and Motherson Sumi Wiring.

Further, the oil & gas sector’s weightage was at an 18-month high of 7.3%, up 20 bps MoM and 40 bps YoY, while that of private banks moderated–down 40bps MoM–to 17.5% in June, after rising for two consecutive months.

Metal stocks weightage moderated to a 26-month low of 1.9%, down 30 bps MoM.

The report said mutual schemes were a net in 70% or 35 out of 50 Nifty stocks.

The month saw notable changes in sector and stock allocation of funds. On a sequential basis, weights of automobiles, oil & gas, consumer, healthcare, telecom, and PSU banks rose, while those of private banks, metals, NBFCs, cement, retail, utilities, textiles, insurance, and chemicals moderated.

The Nifty slid 4.8% in June after a 3% decline in May. The market closed in the red for the third consecutive month and reported the steepest monthly decline since March 2020.

Foreign institutional investors’ (FIIs) recorded outflows for the ninth consecutive month, with outflows of $6.3 billion in June– the highest since March 2020.

According to the report, however, domestic inflows remained robust at $6 billion in June. During the current calendar year, inflows stood at $27.4 billion.

“The adverse macro backdrop, with heightened worries on rising interest rates, elevated crude oil prices, and liquidity tightening, has kept the market volatile and jittery. However, defying all odds, investors continued to invest in mutual funds with inflows and contributions in systematic investment plans (SIPs) remaining strong at 12,280 crore in June – a tenth consecutive month of 10,000 crore plus investment in SIPs,” Motilal Oswal Financial Services said in the report.

Further, total assets under management (AUM) of the MF industry declined for the second consecutive month to 35.6 trillion (-4.2% MoM) in June, the lowest level since August 2021, led by a decline in AUM for income ( 71,100 crore), equities ( 40,500 crore), liquid ( 21,900 crore), other ETFs ( 11,500 crore).

Equity AUM for domestic MFs, including ELSS and index funds, decreased 2.9% MoM to 13.8 trillion in June.

“This was due to a decline in equity scheme sales (down 7.6% MoM to 35,500 crore),” the report said.

At the same time, redemptions dipped 15.4% MoM to 12,700 crore, a 25-month low. Consequently, net inflows declined marginally to 22,800 crore in June, from 23,400 crore in May.

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