Large cap, mid-cap and small caps that MFs traded in April 2022

17 May 2022 , 09:25 AM

FY22 was a robust year for equity fund inflows. The support for equity fund flows largely came from a slew of NFOs and robust SIP collections. Indian mutual funds closed FY22 with total SIP collections in excess of Rs1.24 trillion. Compared to March 2022, the SIP flows in April 2022 were relatively lower at Rs11,683 crore. That, could be more due to the current uncertainty in the markets and should rectify soon.
There are 3 trends visible in the recent flows into equity funds. Firstly, a large number of young investors are actively investing in mutual funds. Secondly, SIPs have become the default onboarding strategy for equity MF investors, especially millennial investors. Lastly, SIP investors are not panicking when markets fall. They learnt during the pandemic crash, that only those who held on, laughed all the way to the bank.

Flows into equity funds is one part of the story. The logical question is; what did it translate into? One of the reasons stock markets have not fallen vertically, despite heavy FPI selling, is that domestic mutual funds provided support. That comes from the strength of flows into equity funds. Here we look at what mutual funds are doing with the equity flows? The focus; mutual fund buy and sell action in April 2022 across large caps, mid-caps and small caps.

Large cap stocks that mutual funds bought and sold in April 2022

First, the large cap story! Large caps adhere to the traditional AMFI definition based on market cap  rankings. Here is how it is done. The universe of listed stocks on NSE and BSE are ranked descending on market cap. Then, top-100 stocks by market cap are classified as large cap stocks. Here are the major large cap stocks MFs bought and sold in April 2022.

In April 2022, mutual funds overall added 201 lakh shares of SBI Cards & Payment Services, 200 lakh shares of SAIL, 223 lakh shares of IOCL, 217 lakh shares of Hindalco, 37 lakh shares of Gland Pharma and 33 lakh shares of UPL. In addition, mutual funds added smaller quantities of Macrotech Developers, IRCTC, Siemens and Berger Paints. SBI Cards was accumulated by SBI MF after the sharp correction in the stock. There was also value buying in metal stocks like Hindalco and SAIL after the recent correction. IOCL was a play on robust crude prices as well as improving gross refining margins (GRMs). Many of the large cap buys were stocks that have been among the worst hit in the recent sell-off, so there has been a good deal of value digging by mutual funds in large cap stocks.

Let us now turn to the large cap selling. There was a tendency to churn and sell out where there were profits plus hazy future guidance. A total of 190 lakh shares of Zomato were sold. In addition, 190 lakh shares of Tata Power, 114 lakh shares of HDFC Life, 72 lakh shares of Adani Ports, 108 lakh shares of Vedanta, 32 lakh shares of Godrej Consumer, 29 lakh shares of Indus Towers and 32 lakh shares of Tata Consumer were sold by mutual funds in April 2022. In addition, mutual funds sold smaller quantities of Marico in the month. The selling was focussed on taking profits off the table in stocks that had shown good traction.

Mid-cap stocks that mutual funds bought and sold in April 2022

Let us turn to mid-cap stocks. If the top 100 stocks by market capitalization, as explained earlier, are classified as large cap stocks; then the 101st to the 250th rank are classified as mid-cap stocks. Here are mid cap stocks that mutual funds bought and sold in April 2022.

In April 2022, mutual funds overall added 1,433 lakh shares of Vodafone, 300 lakh shares of Bandhan Bank, 381 lakh shares of Zee Entertainment, 103 lakh shares of Canara Bank, 106 lakh shares of L&T Finance Holdings, 85 lakh shares of TVS Motors, 53 lakh shares of Shriram Transport Finance and 54 lakh shares of LIC Housing Finance. In addition, MFs also added smaller quantities of Ruchi Soya and Nippon Life India AMC. Mutual funds have been zeroing in on Vodafone, Zee and Bandhan over last few months as turnaround plays. Shriram Finance and LIC Housing are more of cheap valuation plays on the NBFC sector.

Let us turn to the major mid-cap selling in April 2022. About 64 lakh shares of GMR Infra were sold in the month. In addition, MFs sold 25 lakh shares of Escorts, 52 lakh shares of Indraprastha Gas, 14 lakh shares of Aditya Birla Sun Life AMC, 17 lakh shares of Syngene International, 8 lakh shares of ICICI Securities and 4 lakh shares of Godrej Industries in April 2022. The theme appeared to be to stay light on mid-caps where news flows were not exactly encouraging, especially considering the vulnerability of markets overall.

Small cap stocks that mutual funds bought and sold in April 2022

Finally we come to the small caps. On the market capitalization roster, the stocks ranked 251st and lower are classified as small caps by AMFI. Here are the key small cap stocks that mutual funds were most active in April 2022.

In April 2022, mutual funds added 80 lakh shares of Indiabulls Real Estate, 42 lakh shares of Bector’s Food Specialities, 33 lakh shares of JK Paper, 22 lakh shares of Barbecue Nation, 21 lakh shares of Godrej Agrovet, 20 lakh shares of Care Ratings and 16 lakh shares of Pricol. Mutual funds also added smaller quantities of INEOS and Network 18.

What about small-cap selling in April 2022?

About 132 lakh shares of RBL Bank were sold in April 2022. In addition, MFs sold 58 lakh shares of Indiabulls Housing Finance, 108 lakh shares of Hathaway Cable, 37 lakh shares of Varroc Engineering, 13 lakh shares of Metropolis Healthcare, 8 lakh shares of Mahanagar Gas, 10 lakh shares of GE Power India and 11 lakh shares of Suntech Realty in April 2022. In addition, mutual funds sold smaller quantities of Mastek Ltd and Healthcare Global Enterprises.

To sum up the April 2022 MF stock selection story, there was a rush to churn portfolios. The urge to churn profit making mid-caps and small caps as well as the urgency to get out of stagnating stocks was a priority. There was a lot of value digging visible in the large cap stocks. Overall, mutual funds were busy filling in the gaps left by the FPIs in April 2022.