Due to consistent monthly inflows, mutual funds have purchased stocks, notwithstanding the fluctuations in February.
The Adani Group crisis, which affected market mood and led to a sell-off, caused the Sensex to decline 1% in February. Nonetheless, with a total infusion of Rs. 15,686 cr in February, mutual fund inflows into equity-oriented funds reached a nine-month high.
Fund companies invested in large-cap stocks, including GAIL, Indigo, Tata Motors, and Dabur India. As per ICICI Direct Research, they simultaneously sold Adani equities comprising Adani Ports and SEZ, Adani Enterprises, Adani Total Gas, and Ambuja Cements.
Thematic and small-cap funds saw significant inflows of $3,856 crore and $2,246 crore, respectively. Over the past three quarters, mutual funds’ interest in mid-cap and small-cap stocks has increased.
Data shows systematic investment plans (SIP) inflows were likewise stable, albeit slightly declining to 13,686 crores in February from 13,856 crores in January 2023.
Mutual Funds Going Small
Mutual funds have started investing in mid-cap and small-cap stocks in recent times. Mid-caps and small caps have seen increased interest over the past three quarters; small-cap funds received net inflows of 15,172 crores, while mid-cap funds witnessed inflows of 14,632 crores.
In the past three quarters, less than half as much as mid-cap and small-cap funds reached large-cap funds at 6,392 crores.
Biocon, Coforge, Biocon, and Dr Lal Pathlabs are some of the significant mid-cap stocks mutual funds purchased in February while selling Vodafone Idea, IDFC First Bank, and Canara Bank.