Mutual funds embrace healthcare, finance stocks as smallcaps bounce back

Mutual funds (MFs) devoured smallcap shares across sectors like healthcare, hospitality, and financial services, as the net inflows bounced back in April from the March lows. 

Angel One, Gland Pharma, and Jubilant Food were the top three buys with the net holding of MFs in these companies rising by over Rs 2,700 crore during the month.

Smallcap funds raked in net inflows of Rs 2,209 crore in April amid a sharp rally in smallcap shares. The Nifty Smallcap 100 index went up 11.4 per cent last month vis-a-vis a 4.4 per cent decline in March. The correction in March came amid regulatory concerns over smallcap valuations.

They also reduced their holding in some of the stocks. J K Cements, Indraprastha Gas, Federal Bank, Blue Star, and Sona BLW were among the most sold smallcap stocks as MFs pulled out around Rs 1,910 crore from these stocks, according to a study by Nuvama Alternative & Quantitative Research.

The highest deployment took place in Kotak Mahindra Bank as MFs added nearly 46 million shares to their portfolio amid a slump in stock prices.

Axis Bank, Bharti Hexacom, Vodafone Idea, and Reliance Industries were also among the top five most bought shares. MFs trimmed their exposure in State Bank of India and Jio Financial Services.

Equity MF schemes have seen robust inflows in the past few months, leading to strong MF deployment in the equity market. MFs' equity deployment in calendar year 2024 has already topped Rs 1 trillion.

In April, MFs poured in a net of Rs 32,824 crore into the equity market. In March, the deployment touched a high of Rs 44,233 crore.