October MF trends: Private banks' weightage recovers, IT scales another new high

Equity mutual funds witnessed outflow for the fourth consecutive month in October with investors moving out Rs 2,725 crore compared to an outflow of Rs 734 crore in September, the AMFI data showed. Investors continued to book profit at every higher level.

SIP inflows too remained strong at Rs 7,800 crore in October as compared to

Rs 7,788 crore in September.

The month witnessed notable changes in the sector and stock allocation of funds, brokerage house Motilal Oswal noted in a recent report. After hitting a 29-month low in September, private banks saw a positive interest among MFs in October and its weight was up 160 bps MoM to 17.4 percent. It continued to remain the top sector holding for MFs for the second consecutive month in October.

This trend was well witnessed in stock value changes as well. Five of the top-10 stocks with the most MoM increase in value were from the financial space: ICICI Bank, HDFC Bank, Kotak Mahindra Bank, Axis Bank and HDFC. Infosys, TCS, Bharti Airtel, UltraTech Cement, and Maruti Suzuki were the other top gainers in terms of value.

Other stocks from the Nifty50 index that saw the maximum increase in value were RIL, Dr Reddy's, Cipla, Ipca Labs, and Maruti Suzuki.

While stocks exhibiting the maximum decrease in value MoM were RIL, ITC, Vedanta, HUL, Hero MotoCorp, the report further stated.

Among other sectors, technology's weight continues to scale new highs as the weight increased 20 bps MoM to 11.8 percent. It was the second-best sectoral holding among MFs. Meanwhile, the consumer sector's weight moderated for the fifth consecutive month to 8.3 percent, down 40 bps MoM.

As a result, the consumer sector slipped to the fifth position in MF allocation, making way for the Healthcare sector in the fourth position, noted the brokerage report.

Weight of the oil and gas sector further slipped, hitting a seven-month low of 8.5 percent, down 80 bps MoM.

In October 2020, MFs showed interest in Private Banks, Technology, Cement, NBFCs, and Telecom, leading to an MoM increase in their weights. Oil & Gas, Consumer, Healthcare, Automobile, Capital Goods, Metals, Chemicals, and Media reported an MoM decrease in weights.