Equity funds bet on sectors likely to gain from an economic revival

Indian equity fund managers are seen betting on sectors that could benefit from an economic revival. These include capital goods, public sector banks, automobiles, oil and gas and utilities. Stocks in these universe have seen increase in buying interest by domestic funds.

Equity funds’ allocations to oil & gas sector increased for the second consecutive month to a 14-month high of 7.2 per cent (up 50 basis points month-on-month and 30 bps year-on-year). The allocation to the automobile sector, after hitting a six-month low in March, saw an increase in weight to 6.5 per cent in April.

On the other hand, domestic fund managers pared their exposure to sectors such as technology, metals and telecom, as per a report by Motilal Oswal.

Private banks (17.4 per cent) remained the top sector holding for MFs, followed by technology (11.4 per cent), non-banking financial companies (7.5 per cent), oil & Gas (7.2 per cent), and healthcare (7 per cent).

The data from Motilal Oswal also showed that the highest MoM net buying in April was seen in Hindalco, UPL, HDFC Bank, ONGC and Reliance Industries. On the other side, last month also saw fund managers reducing their holdings in technology space.

MF holdings in Infosys, TCS, Tech Mahindra, Wipro, HCL Tech, L&T Infotech, and Mphasis decreased the most in value terms on a MoM basis.

In April, the benchmark indices fell 2.6 per cent on the back of heightened worries on rising rates and liquidity tightening impacting the global markets adversely. Foreign portfolio investors (FPIs) sold shares worth Rs 17,144 crore, while domestic equity funds purchased stocks worth Rs 19,500 crore in April.
 

Sectors	Weight (In%)	MoM change (pp)
Banks-Private	17.4	0.2
Technology	11.4	-1.6
NBFC	7.5	-0.2
Oil & Gas	7.2	0.5
Auto	6.5	0.3
Source: Motilal Oswal