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Mutual funds increase oil & gas sector weight to 14-month high in April, position in Technology stocks reduced

Mutual fund houses increased their exposure to the oil and gas sector in the month of April along with private banks.

DII inflows continued for the 14th month straight in April 2022 as investors continued to pour money into mutual funds. (Image: REUTERS)

Mutual fund houses increased their exposure to the oil and gas sector in the month of April along with private banks, data sourced by analysts at Motilal Oswal showed. Fund houses increased their position in the oil and gas sector to a 14-month high and trimmed their position in technology stocks, metals, NBFCs and some other sectors. As foreign institutional investors (FII) continued to pull money out of domestic stock markets, turning net sellers for the seventh consecutive month, the story has been different for domestic institutional investors (DII). DII inflows continued for the 14th month straight in April 2022 as investors continued to pour money into mutual funds. 

Sector weightage changed

Data showed that mutual funds now have a weightage of 7.2% assigned to the Oil and Gas sector — a 14-month high. The weightage has increased from 6.7% in March, marking the second consecutive month of weight increase. “The sector now ranks fourth in the allocation of mutual funds – it was in the fifth position a month back,” the report said. Additionally, the weight of the automobile sector has been increased after hitting a six month low in March this year. The weightage assigned to the sector is now at 6.5%.

The report added that consumers’ weight after hitting a 54-month low in March 2022 climbed to 6.4%, the highest since December last year. Further, Private Banks, Utilities, Cement, Capital Goods, and PSU Banks’ weights have also been increased. On the other hand, technology stocks faced the axe. Technology’s weight — after two consecutive months of increase — moderated to an 11-month low of 11.4%, the report showed. In March 2022, the weightage of the technology sector was at 13% and 12.5% in February. 

Overall, Private Banks now hold a 17.4% weightage, followed by Technology at 11.4%, NBFC at 7.5%, Oil & Gas at 7.2%, and Healthcare at 7%. 

Under-owned and over-owned sectors

Motilal Oswal analysed the sectoral allocation of each fund and noted that, even though the oil & gas sector is witnessing inflows, it remains an under-owned sector. Data showed that 20 major fund houses are underweight on the sector when compared to the BSE 200. The consumer and utilities sectors are also under-owned by 18 and 16 fund houses respectively. Technology and NBFCs are followed closely behind. 

Among the over-owned sectors or the sectors where fund houses are overweight are Automobile with 16 fund houses going overweight, Healthcare with 15 overweight funds houses, and capital goods with a similar number. 

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