Mutual fund managers went on a selling spree in IT, pharma stocks in January 2017; 2 companies do not figure in the list

Mutual fund (MF) managers were not bullish on IT and pharma companies, if their selling spree of the stocks of these firms in January 2017 is any indication. During the month, 13 of the top 20 exits for MFs comprised TCS, Tech Mahindra, Cyient, HCL Technologies, Mindtree, HCL Technologies, Info Edge (India), Advanced Enzymes, Torrent Pharma, Dr Lal Pathlabs, Sanofi, Laurus Labs and Torrent Labs. Strangely, Infosys and Wipro do not figure in the list of top 20 exits.

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The month saw most of the IT companies such as Infosys, TCS, Wipro, Tech Mahindra and HCL Technologies declaring their Q3 results, some of which were weak. Besides, these companies were hit by H-1B visa woes arising from a protectionist-sounding Trump administration. Pharma companies were also hit by global headwinds, mainly from the US.

On the other hand, the top 20 stocks added by MFs in January 2017 (based on market value) included HDFC Bank, ICICI Bank, IOC, ITC, ONGC, Yes Bank, Maruti Suzuki, Tata Motors, State Bank of India, Larsen & Toubro, Bharat Electronics and GAIL (India), according to an analysis by brokerage IDBI Capital Markets & Securities.

MFs saw yet another month of significant inflows in January 2017, taking the assets under management (AUMs) to a record high of Rs 17.37 lakh crore. 

The AUMs saw a net increase of Rs 90,750 crore in January 2017, meaning investors poured in that much money into various schemes of the 42 mutual fund (MF) houses in India.

The inflows were not uniform; gold ETFs and gilt schemes saw a net outflow during the month of Rs 35 crore and Rs 212 crore, respectively.

Equity funds saw a net inflow of Rs 3,717 crore, though it marked a sharp decline from Rs 9,196 crore in December 2016. The overall inflows for the period April 2016-January 2017 dropped about 24 percent to Rs 6-17 to Rs 55,689 crore. 

Investments into ELSSs rose to Rs 1,166 crore from Rs 907 crore in the previous month, indicating strong interest among tax payers for tax planning via the ELSS route.

From an AUM viewpoint, the top five MF houses as of January 31, 2017 were ICICI Prudential MF, HDFC MF, Reliance Nippon MF, Birla Sun Life MF and SBI MF.

During January 2017, MFs were net buyers of Indian equities in the stock markets for most of the trading sessions, but the quantum was lower than than in December 2016.

"Mutual Funds were net buyers in equities worth Rs 5,215 crore as against net buying of Rs 9,055 crore in December 2016. In January mutual funds were net buyers in equity in 18 trading sessions and net sellers in 3 sessions. Net buying in equity was recorded highest at Rs 1,048 crore on 11 January 2017 while net selling recorded at Rs 531 crore on 17 January 2017," IDBI Capital Markets & Securities said in its note.