How MFs churned large caps, mid-caps, and small caps in January 2025?

12 Feb 2025 , 02:18 PM

GROSS CHURN BY MUTUAL FUNDS IN JANUARY 2025

The month of January 2025 saw domestic equity funds getting robust net inflows of ₹39,688 Crore. However, to get a picture of how mutual fund flows impacted equity buying and selling; we need to look at gross purchases and redemptions in equity funds for January 2025. The net inflows into equity funds to the tune of ₹39,688 Crore were comprised of gross purchases of ₹66,630 Crore and gross redemptions of ₹26,942 Crore. It is this total volume of ₹93,572 Crore that directly impacts the equity buying and by mutual funds. Let us break up this churn into large cap, mid-cap, and small cap stocks for January 2025.

LARGE CAP STOCKS: HOW MFS CHURNED IN JANUARY 2025

How do we classify large cap stocks for our analysis. We adhere to the AMFI definition. The top-100 stocks ranked by market cap are classified as large cap stocks. This is not a static list, but it is reviewed by AMFI twice a year to ensure that definitions are current and the latest cut-off is ₹1 Trillion. Here is the large cap churn in January 2025.

Let us start with the mutual fund large cap buys first! Overall, the mutual funds added 1,168 Lakh shares of Zomato Ltd, 909 Lakh shares of Axis Bank, 214 Lakh shares of Hindalco Industries Ltd, 167 Lakh shares of Varun Beverages, 77 Lakh shares of Godrej Consumer Products, 74 Lakh shares of JSW Energy, 19 Lakh shares of Macrotech Developers, 15 Lakh shares of Pidilite Industries, and 14Lakh shares of Hindustan Zinc Ltd (HZL). In addition, mutual funds also accumulated a small portion of Bosch Ltd. Broadly, there are some big bets being made on the beaten stocks that have delivered decent results in Q3FY25.

We now turn to major large cap selling by mutual funds in January 2025. The selling was visible in stocks as part of larger portfolio restructuring as investors tried to move out of discretionary consumer plays. Here are major sell candidates. There was heavy selling of 267 Lakh shares in Bank of Baroda, 126 Lakh shares Bajaj Housing Finance, 47 lakh shares of Cholamandalam Investment & Finance, 32 Lakh shares of Bajaj Finserv Ltd, 22 lakh shares of IRFC, 22 Lakh shares of Havells India, 16 Lakh shares of Hero MotoCorp, and 12 lakh shares of Adani Green Energy. In addition, mutual funds sold smaller quantities in Polycab India and Adani Energy Solutions. The underlying theme on the sell side appears to be taking profits off the table in consumer discretionary stocks.

MID-CAP STOCKS: HOW MFS CHURNED IN JANUARY 2025

What is the classification of mid-caps? If the top 100 stocks by market cap are classified as large cap stocks, then the 101st to 250th ranked stocks by market cap qualify as mid-cap stocks. Here is a quick look at buys and sells of mid-cap stocks by mutual funds in Jan-25.

Let us first focus on mid-cap buying in January 2025. Overall, mutual funds added 914 Lakh shares of Indraprastha Gas Ltd (IGL), 520 Lakh shares of IDFC First Bank, 485 Lakh shares of Vishal Mega Mart, 325 Lakh shares of IRB Infrastructure, 314 Lakh shares of Yes Bank, 114 Lakh shares of Aditya Birla Capital, 79 lakh shares of One97 Communications (Paytm), and 25 Lakh shares of Godrej Properties. In addition, the mutual funds also bought smaller quantities of stocks like BSE Ltd and Mazagon Docks in January 2025. The buying was most prominent in beaten down stocks, but was largely sector agnostic.

We now turn to major mid-cap selling candidates during the month of January 2025. Mutual Funds sold 267 Lakh shares of SAIL, 262 Lakh shares of NALCO, 258 Lakh shares of Ola Electric Mobility, 118 Lakh shares of Kalyan Jewellers, 83 lakh shares of Petronet LNG, 39 lakh shares of Motilal Oswal Financial Services, 31 Lakh shares of SJVN Ltd, and 20 Lakh shares of Tata Technologies Ltd. In addition, the month of January 2025 also saw smaller quantities of selling in Waaree Energies Ltd and Endurance Technologies. The selling in mid-caps was relatively lower in January 2025, and that could be more because fund action was concentrated on large cap stories. Mid-caps came under a lot of scrutiny in recent months.

SMALL CAP STOCKS: HOW MFS CHURNED IN JANUARY 2025

We now turn to small cap stocks. On market cap ranking, the stocks ranked 251st and lower are classified as small caps by AMFI. Here is a gist of the buys and sells by MFs in Dec-24.

In January 2025, mutual funds added 761 Lakh shares of South Indian Bank, 63 Lakh shares of Senco Gold, 39 lakh shares of Happy Forgings, 26 Lakh shares of Ventive Hospitality, 25 Lakh shares of Happiest Minds Technologies, and 17 Lakh shares of Welspun Enterprises. In addition, mutual funds also purchased smaller quantities of Optiemus Infracom, Tanla Platforms, Kaveri Seeds, and Transrail Lighting, in the small cap space in January 2025.

Let us conclude our churn analysis with the small-cap selling in the month of January 2025. Mutual funds sold 209 Lakh shares of Zee Entertainment, 114 Lakh shares of Poonawala Fincorp, 61 Lakh shares of SAMHI Hotels, 54 Lakh shares of CDSL, 32 Lakh shares of Dilip Buildcon, 26 lakh shares of Avalon Technologies, 17 lakh shares of MOIL Ltd, and 15 Lakh shares of Aarti Pharmalabs. In addition, January 2025 also saw mutual funds selling smaller quantities in One MobiKwik Systems and Enviro Infra Engineers.

Broadly, mutual funds have been relatively cautious in the market. Unlike the previous months, the mutual funds were a lot more forthright in buying large caps, mid-caps, and small caps.

However, consumer discretionary remained under pressure.