The last 5 months have been extremely robust for net flows into equity funds, averaging more than ͅ₹37,000 Crore per month. In September, even where there was a massive quarter-end sell-off in debt funds; the equity funds continued to see net inflows at a robust level. You can call it a robust amalgam of SIPs and NFO flows; but the net impact on equity fund flows were quite strong. Remember, each month since June 2023 the gross SIP flows have been setting new record every successive month. In May 2024, equity fund flows witnessed a sharp turnaround at ₹34,697 Crore. June was still better and set an all-time record at ₹40,608 Crore, while July 2024 net flows into equity funds were relatively subdued at ₹37,113 Crore. For August 2024, net inflows into equity funds were at ₹38,239 Crore; while September 2024 saw net inflows of ₹34,419 Crore into equity funds. But, why are we calling this jump from May 2024 as a quantum leap?
To understand the quantum leap story in equity fund flows, one must rewind back to the pre-May flows. The equity funds saw net inflows of ₹18,917 Crore in April, ₹22,633 Crore in March, and ₹26,703 Crore in February 2024. Clearly, the month of May has shifted the net equity fund flows to a higher plane and that means the participation and churn of these equity funds in the stock markets has also shifted higher. The equity fund flows are driven by the SIPs and NFOs, but what do these equity fund flows drive? They drive the churn in the equity markets by mutual funds. Typically, Indian mutual funds and LIC have been contrarian buyers in Indian markets; which explains why markets have never cracked even in the midst of heavy FPI selling. The churn in equities is not driven by the net flows but by the gross churn (sum of equity gross inflows and gross outflows). Let us understand gross flows of equity funds better, to get a hang of the churn in equities.
If flows into equity funds have been robust and MFs have been consistent buyers in equities, the real question is what have mutual funds been buying and how have they churned these flows. Let us look at some key data points first. In September 2024, mutual funds were net buyers in Indian equities to the tune of ₹30,383 Crore; compared to ₹35,397 Crore in August, ₹20,601 Crore in July, ₹29,313 Crore in June, and ₹47,666 Crore in May 2024. This robust investing by the mutual funds were largely driven by the steady mutual fund flows. However, it must be noted here that the MF churn is not determined only by the net equity fund inflows of ₹34,419 Crore. Instead, the participation in stock markets and the resultant churn in equities by mutual funds is determined by the gross fund flow churn.
Now what exactly do we mean by the gross churn? Simply put, it is the sum of purchases and redemptions. The gross flows into equity funds stood at ₹72,167 Crore in September 2024 while ₹37,748 Crore of redemptions were seen. It is this gross figure of ₹1,09,915 Crore that determined the equity churn by mutual funds in the month of September 2024. In India there are around 45 AMCs; so, we cannot practically look at the buying and selling of all these AMCs. Hence we will restrict to a macro picture of how the mutual funds overall bought and sold stocks among large caps, mid-caps, and small caps.
Here are the key large cap stocks that Indian mutual funds bought in the month of September 2024. The buys have been presented in terms of the size of the buying within that category.
Varun Beverages: (Sep-24 Mutual Fund buying worth ₹5,754 Crore)
The stock trades at ₹588.35 per share as of Friday, October 18, 2024. It has a market cap of ₹1,91,136 Crore and trades at a P/E ratio of 88.75X. The company has an ROE of 25.19%.
Infosys Ltd: (Sep-24 Mutual Fund buying worth ₹3,301 Crore)
The stock trades at ₹1,878.85 per share as of Friday, October 18, 2024. It has a market cap of ₹7,80,126 Crore and trades at a PE ratio of 28.25X. The company has an ROE of 33.37%.
Reliance Industries Ltd: (Sep-24 Mutual Fund buying worth ₹2,583 Crore)
The stock trades at ₹2,717.55 per share as of Friday, October 18, 2024. It has a market cap of ₹18,38,721 Crore and trades at a PE ratio of 50.33X. The company has an ROE of 6.97%.
Samvardhana Motherson: (Sep-24 Mutual Fund buying worth ₹2,430 Crore)
The stock trades at ₹205.05 per share as of Friday, October 18, 2024. It has a market cap of ₹1,44,275 Crore and trades at a PE ratio of 154.69X. The company has an ROE of 2.92%.
Trent Ltd: (Sep-24 Mutual Fund buying worth ₹2,060 Crore)
The stock trades at ₹7,770.30 per share as of Friday, October 18, 2024. It has a market cap of ₹2,76,224 Crore and trades at a PE ratio of 169.49X. The company has an ROE of 36.65%.
Here are the key large cap stocks that Indian mutual funds sold in the month of September 2024. The sells have been presented in terms of the size of the selling within that category.
ICICI Bank: (Sep-24 Mutual Fund selling worth ₹(3,061) Crore)
The stock trades at ₹1,263.20 per share as of Friday, October 18, 2024. It has a market cap of ₹8,90,191 Crore and trades at a P/E ratio of 21.04X. The company has an ROE of 17.74%.
Tata Motors: (Sep-24 Mutual Fund selling worth ₹(1,434) Crore)
The stock trades at ₹910.05 per share as of Friday, October 18, 2024. It has a market cap of ₹3,34,979 Crore and trades at a P/E ratio of 32.98X. The company has an ROE of 33.69%.
NTPC Ltd: (Sep-24 Mutual Fund selling worth ₹(1,385) Crore)
The stock trades at ₹424.75 per share as of Friday, October 18, 2024. It has a market cap of ₹4,11,866 Crore and trades at a P/E ratio of 22.23X. The company has an ROE of 12.36%.
Divi’s Laboratories: (Sep-24 Mutual Fund selling worth ₹(1,245) Crore)
The stock trades at ₹6,024.85 per share as of Friday, October 18, 2024. It has a market cap of ₹1,59,941 Crore and trades at a P/E ratio of 96.29X. The company has an ROE of 12.32%.
Sun Pharmaceuticals: (Sep-24 Mutual Fund selling worth ₹(724) Crore)
The stock trades at ₹1,909.80 per share as of Friday, October 18, 2024. It has a market cap of ₹4,58,214 Crore and trades at a P/E ratio of 168.75X. The company has an ROE of 11.46%.
Here are the key mid-cap stocks that Indian mutual funds bought in the month of September 2024. The buys have been presented in terms of the size of the buying within that category.
Phoenix Mills: (Sep-24 Mutual Fund buying worth ₹6,005 Crore)
The stock trades at ₹1,609.30 per share as of Friday, October 18, 2024. It has a market cap of ₹57,531 Crore and trades at a PE ratio of 177.00X. The company has an ROE of 6.42%.
GE T&D: (Sep-24 Mutual Fund buying worth ₹4,258 Crore)
The stock trades at ₹1,818.95 per share as of Friday, October 18, 2024. It has a market cap of ₹46,574 Crore and trades at a PE ratio of 162.08X. The company has an ROE of 23.12%.
Prestige Estates: (Sep-24 Mutual Fund buying worth ₹1,493 Crore)
The stock trades at ₹1,766.15 per share as of Friday, October 18, 2024. It has a market cap of ₹76,073 Crore and trades at a PE ratio of 336.61X. The company has an ROE of 3.31%.
Sona BLW Precision: (Sep-24 Mutual Fund buying worth ₹1,201 Crore)
The stock trades at ₹637.50 per share as of Friday, October 18, 2024. It has a market cap of ₹39,605 Crore and trades at a PE ratio of 73.64X. The company has an ROE of 20.89%.
General Insurance Corp: (Sep-24 Mutual Fund buying worth ₹832 Crore)
The stock trades at ₹387.30 per share as of Friday, October 18, 2024. It has a market cap of ₹67,948 Crore and it has a free float market cap of just about ₹9,513 Crore.
Here are the key mid-cap stocks that Indian mutual funds sold in the month of September 2024. The sells have been presented in terms of the size of the selling within that category.
Vodafone Idea: (Sep-24 Mutual Fund selling worth ₹(1,215) Crore)
The stock trades at ₹9.02 per share as of Friday, October 18, 2024. It has a market cap of ₹62,869 Crore and trades at a P/E ratio of -2.10X. The company has an ROE of 28.82%.
Bharat Forge: (Sep-24 Mutual Fund selling worth ₹(678) Crore)
The stock trades at ₹1,474.70 per share as of Friday, October 18, 2024. It has a market cap of ₹68,647 Crore and trades at a P/E ratio of 49.65X. The company has an ROE of 16.14%.
Voltas Ltd: (Sep-24 Mutual Fund selling worth ₹(645) Crore)
The stock trades at ₹1,864.90 per share as of Friday, October 18, 2024. It has a market cap of ₹61,707 Crore and trades at a P/E ratio of 84.67X. The company has an ROE of 9.72%.
Kalyan Jewellers: (Sep-24 Mutual Fund selling worth ₹(514) Crore)
The stock trades at ₹718.75 per share as of Friday, October 18, 2024. It has a market cap of ₹74,120 Crore and trades at a P/E ratio of 125.57X. The company has an ROE of 14.16%.
Mankind Pharma: (Sep-24 Mutual Fund selling worth ₹(490) Crore)
The stock trades at ₹2,648.35 per share as of Friday, October 18, 2024. It has a market cap of ₹1,06,105 Crore and trades at a P/E ratio of 55.04X. The company has an ROE of 20.03%.
Here are the key small cap stocks that Indian mutual funds bought in the month of September 2024. The buys have been presented in terms of the size of the buying within that category.
KIMS Ltd: (Sep-24 Mutual Fund buying worth ₹12,745 Crore)
The stock trades at ₹539.40 per share as of Friday, October 18, 2024. It has a market cap of ₹21,854 Crore and trades at a PE ratio of 92.47X. The company has an ROE of 12.51%.
Sapphire Foods: (Sep-24 Mutual Fund buying worth ₹8,621 Crore)
The stock trades at ₹347.25 per share as of Friday, October 18, 2024. It has a market cap of ₹11,106 Crore and trades at a PE ratio of 304.48X. The company has an ROE of 2.97%.
VST Industries: (Sep-24 Mutual Fund buying worth ₹2,800 Crore)
The stock trades at ₹368.50 per share as of Friday, October 18, 2024. It has a market cap of ₹6,259 Crore and trades at a PE ratio of 23.06X. The company has an ROE of 21.67%.
Indigo Paints Ltd: (Sep-24 Mutual Fund buying worth ₹968 Crore)
The stock trades at ₹1,565.30 per share as of Friday, October 18, 2024. It has a market cap of ₹7,456 Crore and trades at a PE ratio of 51.84X. The company has an ROE of 15.72%.
KPR Mills: (Sep-24 Mutual Fund buying worth ₹813 Crore)
The stock trades at ₹929.15 per share as of Friday, October 18, 2024. It has a market cap of ₹31,760 Crore and trades at a PE ratio of 52.30X. The company has an ROE of 18.00%.
Here are the key small cap stocks that Indian mutual funds sold in the month of September 2024. The sells have been presented in terms of the size of the selling within that category.
CDSL Ltd: (Sep-24 Mutual Fund selling worth ₹(622) Crore)
The stock trades at ₹1,579.30 per share as of Friday, October 18, 2024. It has a market cap of ₹33,007 Crore and trades at a P/E ratio of 67.34X. The company has an ROE of 25.98%.
Zee Entertainment: (Sep-24 Mutual Fund selling worth ₹(424) Crore)
The stock trades at ₹132.40 per share as of Friday, October 18, 2024. It has a market cap of ₹12,717 Crore and trades at a P/E ratio of 29.70X. The company has an ROE of 4.28%.
Kaynes Technology: (Sep-24 Mutual Fund selling worth ₹(325) Crore)
The stock trades at ₹5,616.00 per share as of Friday, October 18, 2024. It has a market cap of ₹35,948 Crore and trades at a P/E ratio of 240.59X. The company has an ROE of 6.15%.
Granules India Ltd: (Sep-24 Mutual Fund selling worth ₹(322) Crore)
The stock trades at ₹596.90 per share as of Friday, October 18, 2024. It has a market cap of ₹14,467 Crore and trades at a P/E ratio of 32.16X. The company has an ROE of 14.46%.
IIFL Finance: (Sep-24 Mutual Fund selling worth ₹(320) Crore)
The stock trades at ₹449.50 per share as of Friday, October 18, 2024. It has a market cap of ₹19,079 Crore and trades at a P/E ratio of 46.43X. The company has an ROE of 7.34%.
Mutual funds are enthusiastic participants in Indian IPOs and so bulk of the fresh stock additions in a month comes from the IPO flows. This could be either in the form of anchor allocation or as part of the QIB allocation quota. For the month of September 2024, mutual funds made 11 fresh additions in equities; largely via IPOs. Some of the major fresh stock additions by mutual funds in September 2024 included Bajaj Housing Finance ₹1,740 Crore, PN Gadgil Jewellers ₹483 Crore, SpiceJet (private placement) ₹305 Crore, Kross Ltd ₹110 Crore, Western Carriers India ₹68.94 Crore, and Northern ARC Capital ₹37 Crore. Others were relatively much smaller in size.
Amidst the mountain of buy and sell data, what are the key takeaways from the September 2024 Mutual Fund flow data, and are there any trends visible? We saw 3 key trends.
Is this a sign that institutional interest in small and mid-caps is coming back. We just have to wait and watch for now!
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