Mutual Funds Top Buy & Sell Ideas: The year 2023 has been very positive for the domestic stock market. In 2023, Nifty gave returns of around 20 percent. Expectations of the peak of the rate hike cycle, moderation in inflation, improvement in liquidity and steadily increasing retail participation in equities along with strong corporate earnings drove this performance. FII flows increased again in CY23 (inflow of USD21 billion as against inflow of USD17 billion in CY22). Domestic flows remained resilient at USD22 billion (+USD32 billion in CY22) amid busy primary and secondary market activities. Meanwhile, mutual funds also made some changes in their stock strategy. The confidence of Mutual Funds increased on some sectors and shares (Mutual Funds Portfolio), while they withdrew money from the shares of some sectors. Brokerage house Motilal Oswal has released a report in this regard.
CY23: Equity AUM grows 43% YoY
Countering the challenges, equity AUM of domestic mutual funds grew for the 10th consecutive year to Rs 23.8 trillion in CY23 (+43% YoY). The growth in AUM was driven by bullish trends in market indices (Nifty: +20% YoY) and higher equity scheme sales (Rs 5386 billion, 13% YoY). However, redemptions also increased by 39 per cent YoY to Rs 3323 billion, reducing net inflows to Rs 2063 billion in CY23 from Rs 2383 billion in CY22.
Mutual fund industry AUM: Rs 50.8 lakh crore
The total AUM of the mutual fund industry is expected to increase by 27 per cent (Rs 10.9 trillion) year-on-year to Rs 50.8 trillion (Rs 50.8 trillion) by the end of 2023.Mutual Funds AUM) reached at. There was significant growth in equity funds (₹7224 billion), other ETFs (₹1255 billion), balanced funds (₹1109 billion), and arbitrage funds (₹595 billion). Investors continued to invest in mutual fund schemes through SIPs and through Investment reached a new high of Rs 17610 crore in December 2023. It has increased by 3.1% on monthly basis and 29.7% on annual basis.
In which sectors did mutual funds increase allocation?
The sectors on which mutual funds have increased allocation on MoM basis in December 2023 include utilities, healthcare, capital goods, PSU banks and telecom sectors. In the defensive sector, the mutual fund house has increased the weightage by 120 basis points to 29.6 percent. Whereas the weightage in technology and consumer durables has been moderate.
# Weightage in domestic cyclicals decreased by 110 basis points to 62.1%, especially BFSI and chemicals declined.
# The weightage in Global Cyclicals also decreased by 20 bp to 8.2 percent, especially the decline was more in Oil & Gas.
# In the year 2023, the weightage in capital goods increased by 130 bp to 7.5 percent. It moved from 8th to 4th position on an annual basis.
# Weightage in BFSI reduced by 360 bp to 29 percent.
# The weightage in technology has been moderated by 30 bp and it came to 9.4 percent. There has been no change in its position on an annual basis.
# Weight in healthcare increased by 60 bp on annual basis to 9.4 percent.
# Weight in utilities increased by 110 bp on annual basis to 4.3 percent.
Top 10 stocks: In which investment increased
HDFC Bank
ICICI Bank
Reliance Industries
L&T
SBI
NTPC
Infosys
Bharat Electronics
ITC
Axis Bank
Top 10 stocks in which investment decreased
Indiabulls Housing
HDFC Life Insurance
PI Industries
Dr Reddy’s Labs
Maruti Suzuki
Phoenix Mills
Max Financial Services
ICICI Lombard
Vedant Fashions
Ratnamani Metals
(Source: Motilal Oswal)