SUMMARY: Equity inflows witness a slowdown; Automobiles hog the limelight by Motilal Oswal Financial Services Ltd
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Key observations
The Nifty fell 1.4% month-on-month (MoM) to 24,427 in August 2025, marking its second consecutive monthly decline. Despite extreme volatility, the index swung ~816 points before settling 342 points lower. Domestic institutional investors (DIIs) recorded their second-highest inflows ever at USD 10.8 billion, following an all-time high in October 2024. Meanwhile, foreign institutional investors (FIIs) saw outflows of USD 4.3 billion, extending their streak to two months. Year-to-date in 2025, FII outflows reached USD 15.1 billion compared to USD 0.8 billion in CY2024. DII inflows remained strong at USD 62.3 billion in CY2025 YTD versus USD 62.9 billion in CY2024.
The mutual fund industry’s total assets under management (AUM), after hitting a record INR 75.4 trillion in July 2025, dipped marginally to INR 75.2 trillion (-0.2% MoM) in August 2025. This decline was primarily driven by MoM dips in AUM for equity (-INR 209 billion), liquid (-INR 70 billion), other ETFs (-INR 22 billion), and gilt funds (-INR 16 billion). In contrast, Gold ETFs saw an increase of INR 49 billion, income funds rose by INR 36 billion, balanced funds grew by INR 25 billion, and arbitrage funds gained INR 22 billion.
Domestic MFs’ equity AUM (including ELSS and index funds) fell 0.6% MoM to INR 36.2 trillion in August 2025, influenced by weaker market performance (Nifty down 1.4% MoM) and lower sales of equity schemes (down 18.5% MoM to INR 687 billion). Redemptions slowed to INR 338 billion (-14.1% MoM), resulting in moderated net inflows of INR 349 billion vs. INR 450 billion in July 2025.
Investors continued favoring mutual funds, with systematic investment plan (SIP) inflows reaching INR 282.7 billion in August 2025 (-0.7% MoM, +20% YoY).
A few interesting facts
* Sector and stock allocation saw notable shifts. MoM, Automobiles, Technology, Consumer, Telecom, Retail, and Media gained weight, while Private Banks, Healthcare, Capital Goods, Oil & Gas, Chemicals, and Real Estate took a hit.
* Automobiles’ weight rose for the second straight month, hitting a 10-month high of 8.5% (+50 bps MoM; -10 bps YoY).
* Technology’s weight inched up to 7.9% (+10 bps MoM; -130 bps YoY) after touching a 14-month low (7.8%) in July 2025.
* Private Banks’ weight slid to a seven-month low of 17.5% (-50 bps MoM; +160 bps YoY).
* Healthcare’s weight fell to 7.6% (-20 bps MoM; +20 bps YoY) after peaking at a seven-month high in July 2025.
* Top sectors where MF ownership vs. BSE 200 exceeds by at least 1%: Healthcare (16 funds overweight), Chemicals (11 funds overweight), Consumer Durables (11 funds overweight), Capital Goods (9 funds overweight), and Retail (8 funds overweight).
* Top sectors where MF ownership lags vs. BSE 200 by at least 1%: Consumer (18 funds underweight), Oil & Gas (17 funds underweight), Private Banks (16 funds underweight), Utilities (12 funds underweight), and Technology (10 funds underweight).
* MoM valuation changes showed sectoral divergence: Top gainers were Maruti Suzuki (+INR 87.2 bn), Eternal (+INR 86.5 bn), TVS Motor (+INR 32.9 bn), Infosys (+INR 29.4 bn), and Adani Energy Solutions (+INR 26.1 bn).
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