With multiple parameters are pointing towards a serious economic slowdown or recession, such as falling GDP, weakening consumption and manufacturing data and the slowdown in industrial production, market analysts have a gloomy outlook for most sectors. The Nifty oscillated the 10,700-11,100 range in August 2019 to finally close 0.9 percent lower. This is a clear indication of deteriorating market sentiment amid concerns about the macro environment as well as the lack of earnings revival.
Most equity mutual funds have also performed poorly over the past one year period, with some funds giving negative returns. However, analysts still don't advise exiting from mutual funds at this critical time.
Despite a small fall in SIPs in the month of August, analysts do not advise investors to stop the SIPs going forward.
"It is sad to note that every time there is a drop in stock markets, investors re-think on their SIP investments. Some even take the drastic step of suspending SIPs. They may want to take money out, fearing a longer and deeper market correction," HDFC Securities said in a report. In case of a fall in markets, investors gain more units by investing the same amount. In fact, SIP investors should cheer a correction has happened as now one can buy more MF units via SIP, suggests the brokerage.
For the month of August mutual funds saw a notable change in the sector and stock allocation of funds. On a month-on-month basis, the weight of oil & gas, NBFCs, tech, autos, retail, healthcare, and consumer increased, while that of PSU banks, metals, utilities, capital goods, private banks, infrastructure and media moderated.
Oil & Gas sector's weight increased for the MFs, it attracted highest monthly equity inflows since February 2018 for the second successive month to 8 percent. The sector is now at the fifth position in sector allocation of MFs as against the seventh position 12 months ago.
Autos’ weight also increased 10 bps MoM to 5.5 percent, after trending down for 15 straight months, meanwhile, the consumer sector's weight climbed to a new high of 8.2 percent.
In terms of value increase MoM, top five stocks in august were Reliance Industries, HDFC, HDFC Bank, TCS, and Avenue Supermarts, while, in terms of value decrease MoM, four of the top 10 stocks were from Financials. SBI, ITC, IOC, Tata Steel, and NTPC witnessed the maximum decline in value on an MoM basis.
Equity value in these mutual funds rose and fell the most in the last 1 year (Source: MOSL report):
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First Published: IST