MFs prefer pvt banks over IT, auto, PSU banks; increase value in HDFC Bank

Private banks, non-banking financial companies (NBFCs), healthcare, telecom, and metals were preferred sectors by mutual funds

The steep decline in the Indian market, where the Nifty50, and the Sensex fell around 14 per cent from their record highs, has pushed mutual funds to change their portfolio strategy. Even the broader market indices felt the heat with the Nifty MidCap100 index down nearly 20.45 per cent from its peak in September, and the Nifty SmallCap100 index falling around 24 per cent from its all-time high in December.

 

As per a Motilal Oswal Financial Services' report, equity asset under management (AUM) of domestic mutual funds (MFs) (including ELSS and index funds) decreased 6.7 per cent month-on-month (M-o-M) to Rs 30.1 trillion in February 2025, led by a fall in Indian equities in the same period. On an M-o-M basis, Nifty50 has slipped 5.78 per cent and Sensex skid 5.56 per cent.

 

 

Meanwhile, the pace of redemptions slowed down to Rs 29,500 crore, down 5.7 per cent M-o-M. In mutual funds, redemption is the process of selling back your units to the asset management company (AMC) to convert them into cash, either partially or fully.

 

Consequently, net inflows moderated to a 10-month low in February 2025 to Rs 33,400 crore as compared to Rs 44,900 crore in January 2025.

 

The total AUM of the mutual funds industry declined 4 per cent M-o-M to Rs 64.5 trillion in February 2025, primarily owing to a M-o-M dip in AUM of equity funds at Rs 2,15,000 crore, other ETFs (Rs 36,000 crore), and balanced funds (Rs 23,600 crore).

 

However, inflows and contributions in systematic investment plans (SIPs) continued at Rs 26,000 crore in February 2025, down 1.5 per cent M-o-M.

 

Sectors such as private banks, non-banking financial companies (NBFCs), healthcare, telecom, and metals were preferred by mutual funds over capital goods, technology, automobiles, consumer, oil & gas, utilities, PSU banks, retail, and infrastructure.

 

In private banks, mutual funds weightage stood at a 16-month high in February 2025 to 18.5 per cent as compared to 17.1 per cent in January 2025. The stocks that saw maximum M-o-M increase in value were HDFC Bank, Axis Bank, and Kotak Mahindra Bank, with net buying of shares worth Rs 11,010 crore (4.4 per cent), Rs 4,830 crore (5.2 per cent), and Rs 1,890 crore (2.9 per cent), respectively.

 

Among NBFCs, Bajaj Finance, Bajaj Finserv, and Shriram Finance saw a net buying of shares worth Rs 1,789.9 crore (4.1 per cent), Rs 1300 crore (9.9 per cent) and Rs 640 crore (6.7 per cent) respectively.

 

Meanwhile, mutual funds' weightage in healthcare stood at 7.6 per cent in February 2025 with the highest M-o-M net buying in Dr. Reddy’s Laboratories shares worth Rs 11,330 crore (11.8 per cent) and Apollo Hospitals worth Rs 12,240 crore (10.5 per cent).

 

The weightage in the telecom sector stood at 3.4 per cent and metals at 2.6 per cent in February 2025.

 

Conversely, in the technology sector, the weightage moderated in February 2025 to 9.3 per cent from 9.6 per cent in January 2025. The net selling in Infosys and Tata Consultancy Services (TCS) was worth Rs 13,140 crore (-9.6 per cent) and Rs 5,970 crore (-9.3 per cent)

 

Furthermore, automobiles' weightage touched a 19-month low in February 2025 to 8.1 per cent from 8.4 per cent in January. Capital Goods' weight moderated for the third consecutive month in February 2025 to 6.8 per cent from 7.4 per cent in January.  

All MFs hit in Feb 2025

Among the top 20 funds, the highest M-o-M decline was seen in Axis Mutual Fund slipped 8.8 per cent, Kotak Mahindra Mutual Fund fell 7.5 per cent, DSP Mutual Fund declined 7.3 per cent, SBI Mutual Fund was down 6.8 per cent, and Aditya Birla Sun Life Mutual Fund was down 6.7 per cent.

 

Conversely, the lowest was seen in PPFAS Mutual Fund down 2.8 per cent, ICICI Prudential Mutual Fund down 5 per cent, and HDFC Mutual Fund down 5.5 per cent.

 

Data compiled by Motilal Oswal

 

Meanwhile, the net asset value (NAV) of top mutual fund schemes was also wounded on a M-o-M basis. NAV is the value of an investment company's assets minus its liabilities. It's a key metric used to assess the value of a mutual fund. 

 

Among the top 25 schemes by asset under management (AUM), Nippon India Small Cap Fund declined 12 per cent M-o-M in NAV, Kotak Emerging Equity Fund fell 11.2 per cent M-o-M, HDFC Small Cap Fund slipped 10.5 per cent M-o-M, SBI Small Cap Fund was down 10.1 per cent M-o-M, and Nippon India Growth Fund slipped 9.2 per cent M-o-M.

 

The least fall was seen in the HDFC Flexi Cap Fund scheme to 4.4 per cent, Parag Parikh Flexi Cap Fund 4.4 per cent, ICICI Pru Value Discovery Fund 5.4 per cent, AXIS Bluechip Fund 5.4 per cent, and HDFC Large Cap Fund 5.6 per cent. 

Mutual fund scheme performance in Feb'2025 (Motilal Oswal)