MFs Tilt Portfolios Toward NBFCs, Retail; Trim Private Banks, Autos, Oil & Gas
Amid a 4.3% surge in equity AUMs, fund managers rebalanced in June, favoring credit plays and consumer names while paring back on traditional banking and resource sectors.
Sector Shifts Reflect Rising Confidence and Caution
Fund Folio data from Motilal Oswal shows a clear rotation:
- NBFCs climbed to 5.6% of equity AUMs from 5.3%, as managers hunted for yield outside banks.
- Retail surged to an all-time high of 2.9% (vs. 2.6%), driven by optimism around urban consumption.
- Consumer Durables jumped to 2.5% from 2.1%, reflecting bets on brand premiumisation.
- Healthcare rose to 7.4%, tapping defensive demand amid global uncertainties.
- Telecom weighting hit a 59-month peak of 3.5%, on hopes of renewed data-led growth.
Underweight Positions Signal Caution in Legacy Sectors
Conversely, fund houses dialed back on sectors facing headwinds:
- Private Banks, the largest MF sector position, dipped to 17.9% from 18.4%, marking a second straight monthly decline.
- Still below its 20.8% share in the BSE-200, underscoring a notable underweight.
- Automobiles and Oil & Gas allocations slipped as margin pressures and commodity volatility bite.
- Technology fell to a one-year low of 8.1%, beneath its 9.3% BSE-200 weight, amid profit-booking.
- Utilities and Consumer staples saw modest trims, reflecting selective bets rather than blanket defensive plays.
Broader Market Participation Strengthens
Activity spanned across market caps, showing diffused buying:
- Nifty 50: MFs were net buyers in 48% of stocks—boosting stakes in Bharti Airtel, Asian Paints, and Reliance, while easing off Infosys and HCLTech.
- Nifty Midcap 100: 56% of names saw inflows—ramping up Vishal Mega Mart, REC, and Jindal Stainless, trimming Trent and Persistent.
- Nifty Smallcap 100: 65% of the universe attracted fresh money—Linde India, Lux Industries, and Bank of Maharashtra were favourites; Nazara, Dalmia Bharat Sugar, and Tejas Networks saw reductions.
Overweight vs. Underweight: A Snapshot
Funds continue to overweight sectors they see as structural winners and underweight those facing cyclicality:
- Over-owned (+1% vs. BSE-200): Healthcare (16 funds), Consumer Durables (12), Chemicals (11), Capital Goods (9), Retail (8).
- Under-owned (–1% vs. BSE-200): Consumer Staples (18), Oil & Gas (17), Private Banks (16), Technology (13), Utilities (11).
“This rebalancing reflects fund managers’ tactical view: leaning into credit-linked and consumption-driven themes, while managing risks in more cyclical and rate-sensitive segments,” says a veteran portfolio strategist.
