July’22 brought cheer among investors, both retail and institutional, as the Sensex and Nifty jumped up by nearly 8.7%. Despite the upswing, mutual fund managers have been cautious in picking stocks, especially for fresh purchases as the world economies continue to face inflationary pressures. With rising interest rates across the domestic and international markets, experts anticipate some market correction after this upswing.
A mutual funds composition can tell a lot about the stock markets and the performance of specific stocks. Retail investors must follow this information to gauge market sentiment and also enhance their stock investment decisions.
So, what did mutual funds invest in and what did they sell off in July 2022? Let’s find out.
Which stocks did mutual funds buy & sell in July’22?
Most bought stocks were
- Maruti Suzuki India
Most mutual fund houses increased their stake in auto major Maruti Suzuki by buying additional 1.5 million shares of the company. In terms of value, all mutual funds in total held close to Rs. 13.42 billion worth of Maruti Suzuki shares.
- Kotak Mahindra Bank
Kotak Mahindra Bank stock was the next hot pick by fund houses in July’22. Mutual funds bought 4.5 million shares of this private sector bank and saw the stock’s value rise by Rs. 8.22 billion.
- Zomato
Mutual funds upped their stake in Zomato by adding 107.3 million shares as their value in fund portfolios went up by Rs. 5.02 billion.
- Tata Motors
The total number of shares of Tata Motors in all mutual fund portfolios as of June 2022 was only 227.4 million. By the end of July, this number went up to reach 242.9 million. The stock’s value as held in fund portfolios rose by Rs 6.98 billion.
- HDFC Life Insurance
Mutual funds picked up 10.4 million shares of HDFC Life insurance to up their stake in this insurance giant. In all the value of this stock in mutual fund portfolios soared by Rs. 5.78 billion.
Most sold stocks were
- Housing Development Finance Corporation (HDFC)
HDFC was one of the most sold stocks by mutual fund schemes. As compared to June’22, the stocks of HDFC held by mutual fund houses were down to 5.2 million and the corresponding value dropped to Rs 12.45 billion in July.
- ITC
Another stock that saw high selling by fund houses in July was ITC. The number of ITC shares held by fund houses dropped to 28.8 million and the corresponding value dropped to Rs. 8.73 billion.
Some of the other stocks sold by mutual funds in July included Larsen & Toubro, Axis Bank, SBI Life Insurance, and Tata Steel.
Which sectoral investments did mutual funds make in July?
Except for Aditya Birla mutual fund, almost all major equity mutual funds are heavily invested in the Auto sector. Most funds are invested significantly in capital goods and cement and construction sectors. Fund managers are also bullish about certain auto ancillary, health insurance, vehicle finance, and Agri solutions companies.
Fund houses also went down recently on investing in the IT sector. Similarly, fund houses are staying away from the oil & gas sector.
Conclusion
In July, mutual fund inflows were seen slowing down whereas stock indices went up. Despite turbulent stock market conditions and macroeconomic instability, investors showed positivity with the SIP inflows into equity funds. While actively managed mutual funds saw a slowdown, it was the passive funds which were hot picks for most investors. For active fund investors, it is important to keep a close watch on where the funds are parking their money and where they are withdrawing from.
FAQs
While passive funds do have fund managers, they do not actively pick stocks for investment since passive funds generally follow the composition of the underlying index or benchmark.
Mutual fund compositions are decided by experienced fund managers. When some major mutual funds buy a certain stock, they are expecting the prices to rise and fetch good returns. Therefore, it makes sense to track the entry and exit of mutual funds from stocks and enhance investment decisions.
When major mutual funds avoid investing or exiting a certain stock, it indicates that the stock prices may go down. Therefore, investors can conduct due diligence before investing in such stocks.
Since equity mutual funds are managed by fund managers who are experts in investment decisions, new investors can lower their risk by investing in mutual funds instead of directly investing in stocks.
