Mutual funds have reduced their equity holding across sectors in December with steady profit-booking by investors. After being bullish on banking, mutual funds (MFs) had trimmed their investment to ₹3.04-lakh crore last month against ₹3.06-lakh crore in November, according to data sourced from Ngen Markets.
FMCG, cement too slip
In fact, MFs have trimmed their investment in FMCG and cement sector for the first time in the last six months to ₹40,868 crore and ₹39,091 crore in December against ₹42,026 crore and ₹39,569 crore. TheyIt also reduced theirits holding in pharma and automobile sectors to ₹88,308 crore (₹90,830 crore) and ₹62,670 crore (₹65,430 crore).
With sharp fall in non-performing asset, fund houses have been betting on banks and increased their holding to ₹3.06-lakh crore in November from ₹2.60-lakh crore in July; by December-end, MFs holding slipped to ₹3.04-lakh crore. Similarly, their holding in IT-Software and Finance had dipped to ₹1.30-lakh crore(₹1.47-lakh crore) and ₹1.20-lakh crore (₹1.21-lakh crore).
Except for increasing investment in auto ancillary to ₹40,935 crore from ₹30,131 crore, fund houses have cut their investments across refineries, chemicals, FMCG and cement as the high valuation of markets remained a concern amid recessionary trend in developed economies.
George Thomas, Fund Manager, Quantum AMC, said MFs have been booking profits from sectors which have done well in the recent years. Moreover, he said banks might incrementally see pressure in NIMs on higher deposit rates and credit growth moderation.
Equity MF inflows
Though flows have moderated in the past few months, equity schemes continue to see net inflows. However, muted equity returns over the past year could have a bearing on domestic flows in the near term, he said.
Abhinav Angirish, Founder, Investonline.in, said higher valuation, slowdown in the global economy, muted earnings growth and global recession fears, have led MFs to slow their investment in equities, trading at a premium valuation compared to other emerging markets.
The trend is likely to persist in the near future, until there is a clear indication of global economic growth, the central bank’s stance on key bank ratesand earnings growth, he said.