Mutual fund houses, along with private banks, increased their exposure to the oil and gas sector in April, according to data obtained by analysts at Motilal Oswal. Fund houses have raised their positions in the oil and gas sector to a 14-month high and cut their positions in technology stocks, metals, NBFCs and a few other sectors. As foreign institutional investors (FIIs) continue to withdraw money from the domestic stock market, becoming net sellers for the seventh consecutive month, the story was different for domestic institutional investors (DIIs). The DII flow continued for the 14th straight month in April 2022 as investors continued to invest in mutual funds.
The weight of the sector has changed
The data shows that the weight of mutual funds is now set at 7.2% in the oil and gas sector – a 14-month high. Weight gain for the second month in a row increased from 6.7% in March. “The sector is now in fourth place in terms of mutual fund allocations – a month ago it was in fifth place,” the report said. Also, the weight of the automobile sector has increased after hitting a six-month low in March this year. The weight set for the sector is now 6.5%.
The report added that after a 54-month low in March 2022, consumer weight rose to 6.4%, the highest since December last year. Also, the weight of private banks, utilities, cement, capital goods and PSU banks has been increased. On the other hand, technology stocks have faced axes. The weight of the technology – after two consecutive months of growth – has moderated to an 11-month low of 11.4%, the report shows. As of March 2022, the weight of the technology sector was 13% and 12.5% in February.
Overall, private banks now hold 17.4% weightage, followed by technology at 11.4%, NBFC at 7.5%, oil and gas at 7.2% and healthcare at 7%.
Under-owned and over-owned sectors
Motilal Oswal analyzed the sectoral allocation of each fund and noted that although the oil and gas sector witnessed the flow, it remained a sub-owned sector. The data shows that 20 large fund houses weigh less than the BSE 200. The consumer and utility sectors are owned by 18 and 16 fund houses, respectively. Technology and NBFCs are closely followed.
Among the over-owned sectors or sectors where fund houses weigh more are automobiles, 16 fund houses weigh more, healthcare 15 overweight fund houses and the same number of capital goods.