MFs add shares of Indigo, Paytm, PVR & Nazara Technologies among others in February

• Inflows into equity oriented mutual funds, at ₹15,686 crore, hit a nine-month high in February, .
• According to ICICI Direct Research, in large caps, fund houses bought Indigo, GAIL, Dabur India, Tata Motors among others while mutual funds sold Adani stocks.
• Fund houses also bought mid cap stocks like Paytm, Biocon, Coforge, Dr Lal Pathlabs while they sold Vodafone Idea, IDFC First Bank and Canara Bank.

Despite the volatility seen in equities in the month of February, mutual funds have continued to buy stocks, thanks to steady monthly inflows.

The Sensex slipped 1% in February because of the Adani Group crisis that impacted investor sentiment and triggered a sell-off. Yet, inflows into equity oriented mutual funds hit a nine-month high in February with an infusion to the tune of ₹15,686 crore.

Fund houses bought into large cap stocks like Indigo, GAIL, Dabur India, Tata Motors among others. At the same time, they sold Adani stocks like Adani Enterprises, Adani Ports and SEZ, Ambuja Cements, Adani Total Gas among others, according to ICICI Direct Research.

High inflows were seen in thematic and small cap funds at ₹3,856 crore and ₹2,246 crore respectively. Mutual funds’ interest in mid and small caps has been growing in the last three quarters.

Inflows via systematic investment plans (SIP) were also consistent except they fell marginally to ₹13,686 crore in February against ₹13,856 crore in January 2023, according to data from the Association of Mutual Funds in India.
Source: ICICI Direct Research

Going small
In the last few months, mutual funds have been buying mid and small-cap stocks. Interest in mid and small caps has been growing in the last three quarters – while smallcap funds saw net inflows of ₹15,172 crore, midcap funds had inflows of ₹14,632 crore.

Large-cap funds witnessed inflows worth less than half of the mid and small cap funds — at ₹6,392 crore in the last three quarters.

Key mid cap stocks that mutual funds bought in the month of February include Paytm, Biocon, Coforge, Dr Lal Pathlabs while they sold Vodafone Idea, IDFC First Bank and Canara Bank.
Source: ICICI Direct Research

Analysts say that midcap and small-cap indices have been doing well post the lows hit during Covid times. They delivered better returns than the top 100 companies and that’s what has been driving inflows into these sectors.

In the small cap category, mutual funds bought PVR, Nazara Technologies, Kaynes Technology while they sold ICICI Securities, CarTrade Tech, Easy Trip Planners.
Source: ICICI Direct Research

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