September 2024 Mutual Fund Surge: Record-Breaking SIPs, Small-Cap Rally, and Shifting Investor Trends Unveiled

September 2024 Mutual Fund Surge: Record-Breaking SIPs, Small-Cap Rally, and Shifting Investor Trends Unveiled

“September 2024 has proven to be a transformative month for the mutual fund industry, as SIP flows soar past ₹24,000 crores”


Key Insights from August's Mutual Fund Activities

September 2024 marked a significant milestone in the mutual fund industry, as Systematic Investment Plan (SIP) flows surpassed the ₹24,000 crore mark for the first time, reaching ₹24,508.73 crore. This uptick is reflected in the total active SIP accounts, which climbed to 9.87 crore, up from 9.61 crore in August.

Despite this positive trend, overall inflows into open-ended equity mutual funds experienced a 10% month-on-month decline, totaling ₹34,419 crore. Large-cap funds faced the most substantial drop, with inflows decreasing by 33%.

In contrast, dividend yield funds saw a remarkable 206% increase in inflows, largely driven by a significant new fund offering (NFO) in the category. Notably, inflows into sectoral and thematic funds also fell by 26.85%, indicating a cautious sentiment among investors amid macroeconomic and geopolitical uncertainties.

On a positive note, Multi Asset Allocation Funds demonstrated robust growth, witnessing a 44.03% increase in inflows. This surge underscores a shift in investor preferences toward diversified investment strategies, highlighting the evolving landscape of mutual fund investments.


Charting Market Cap Flow: Insights from September Data

In September 2024, the mutual fund market saw a significant increase in inflows, totaling ₹81,981.01 crore, nearly double compared to August’s inflow of ₹43,342.85 crore. The large-cap segment continued to attract strong interest, with a net inflow of ₹35,136.67 crore, accounting for 42.86% of the total, marking a rise from August’s ₹27,012.71 crore.

Similarly, the small-cap segment saw a surge, contributing ₹35,590.95 crore (43.41%), compared to ₹13,270.85 crore in August, reflecting renewed investor confidence in smaller companies. The mid-cap segment also experienced a notable improvement, with net inflows of ₹11,253.39 crore (13.73%), up from ₹3,059.01 crore in August, though still trailing behind the large- and small-cap segments.

Overall, September’s data highlights a significant rise in market participation, with strong inflows across all market cap segments, particularly in large- and small-cap stocks.


Net Inflow Dynamics: A Monthly Comparison from February to September

In September 2024, the mutual fund market witnessed a significant surge in inflows across all market segments, totaling ₹81,981.01 crore, representing a sharp rise from August’s total of ₹43,342.57 crore. The large-cap segment maintained its stronghold, attracting ₹35,136.67 crore, accounting for 42.86% of the total inflows, a notable increase from August’s ₹27,012.71 crore, continuing the trend of investor preference for safer, blue-chip investments.

The small-cap segment also saw an impressive rise in inflows, with ₹35,590.95 crore, making up 43.41% of total investments. This was a dramatic leap from August's ₹13,270.85 crore, signaling a renewed confidence in smaller, growth-oriented companies.

Mid-cap stocks experienced a rebound as well, with inflows of ₹11,253.39 crore, or 13.73% of the total, up from ₹3,059.01 crore in August. This indicates that investors are again exploring mid-sized companies for potential growth, after a relatively quiet August for mid-caps.


Sector-wise Net Inflows and Outflows in August

After analyzing trends across different market caps and the past six months, let's delve into the sectors that experienced the highest net inflows and outflows in September. This sectoral analysis will provide a clearer picture of where mutual funds are concentrating their investments and which areas they are divesting from, offering valuable insights into current market sentiment and strategic shifts.

In September, mutual funds were active across 19 sectors. Out of these, we will highlight the top three sectors with the highest net inflows and a sector with the highest net outflows. This detailed sector analysis will shed light on the areas where mutual funds are focusing their investments and where they are reducing their exposure, providing a comprehensive view of current market trends and investor preferences.

Top Sectors with highest Net inflows in September

FMCG:

In September 2024, the FMCG sector emerged as the top-performing sector in terms of mutual fund inflows, with a net inflow of ₹19,883.87 crore, representing a significant surge in investor interest. This marked a sharp contrast to the previous month, where the Automobile and Ancillaries sector led the inflows, and the FMCG sector had seen a comparatively modest net inflow of ₹2,037.45 crore in August. The substantial inflow in September reflects growing investor confidence in the stability and long-term growth potential of FMCG companies, as they benefit from consistent demand and robust consumption patterns, making them a preferred choice amid market volatility.

Key players such as Varun Beverages Ltd, Sapphire Foods India Ltd and , and VST Industries Ltd attracted strong buying interest, as investors positioned themselves to benefit from the sector’s potential growth during the festive period

Healthcare:

In September 2024, the Healthcare sector saw a remarkable turnaround, securing the second-highest net inflow with ₹10,203.67 crore. This surge in investment contrasts sharply with August 2024, where the sector faced a net outflow of ₹1,230.01 crore, indicating a shift in investor sentiment. The renewed interest in the Healthcare sector reflects growing optimism around the sector’s resilience and potential for future growth, especially as global health concerns and innovations in pharmaceuticals continue to drive long-term opportunities. This sector replaced the Retail and Other Services sector, which had held the second-highest inflow position in August.

Construction:

In September 2024, the Construction sector emerged as the third-highest recipient of net inflows, attracting ₹9,245.92 crore. This represents a substantial increase compared to August 2024, where the sector recorded a net inflow of ₹3,413.95 crore. The heightened investor interest in the construction space highlights confidence in infrastructure development and real estate growth, as the sector benefits from government initiatives and urbanization trends.


Top Sector with highest Net outflow in September

Consumer Durables:

In September 2024, the Consumer Durables sector recorded the highest net outflow at ₹-671.78 crore, though it marked a reduction in outflows compared to August 2024, where the sector saw ₹-1,174.81 crore in net outflows. Despite the decline in negative sentiment, the sector continues to face challenges as investors remain cautious, possibly due to concerns over demand volatility and changing consumer spending patterns in durable goods. The persisting outflows reflect a wait-and-see approach among market participants toward this segment.

September Momentum: Large Cap Mutual Funds See Notable Net Inflow


In September 2024, the large-cap segment demonstrated a continued strong performance, with a notable net inflow of ₹35,136.67 crore, marking a significant increase from August’s ₹27,012.71 crore. This ongoing rise highlights the growing investor preference for the stability and growth potential offered by large-cap stocks. The segment remains a key driver in the mutual fund market, as investors prioritize large-cap companies to navigate market volatility. This surge underscores the resilience and attractiveness of large-cap investments as a cornerstone of diversified portfolios.

Let's delve into the top five stocks that experienced significant inflows and outflows in September.

Top Large-Cap Stocks with Mutual Fund Inflows in September 2024

Stock Name

Sector

Varun Beverages Ltd.

FMCG

Infosys Ltd.

Technology

Reliance Industries Ltd.

Energy

Samvardhana Motherson International Ltd.

Automobile and Ancillaries

Trent Ltd.

Retail and Other Services


Top Large-Cap Stocks with Mutual Fund Outflows in September 2024

Stock Name

Sector

ICICI Bank Ltd.

Financials

Tata Motors Ltd.

Automobile and Ancillaries

NTPC Ltd.

Energy

Divi's Laboratories Ltd.

Healthcare

Vodafone Idea Ltd.

Media and Communications


Mixed Investor Sentiments in Mid-Cap Stocks


In September 2024, the mid-cap segment experienced a significant resurgence in investor interest, with a total net inflow of ₹11,253.39 crore. This marks a substantial recovery compared to August’s ₹3,059.01 crore inflow, indicating renewed confidence in mid-cap stocks. After months of reduced inflows, September shows a rebound in the mid-cap space, potentially driven by investors seeking growth opportunities amidst market volatility. While it still remains below the June peak of ₹21,129.78 crore, the September figures suggest a strategic shift back toward mid-cap investments as market dynamics continue to evolve.

Top Mid-cap Stocks with Mutual Fund Inflows in September 2024

Stock Name

Sector

The Phoenix Mills Ltd.

Construction

GE T&D India Ltd.

Capital Goods

Prestige Estates Projects Ltd.

Construction

Sona BLW Precision Forgings Ltd.

Automobile and Ancillaries

General Insurance Corporation of India

Financials

Top Mid-cap Stocks with Mutual Fund Outflows in September 2024

Stock Name

Sector

Bharat Forge Ltd.

Automobile and Ancillaries

Voltas Ltd.

Consumer Durables

Kalyan Jewellers India Ltd.

Retail and Other Services

Mankind Pharma Ltd.

Healthcare

Indraprastha Gas Ltd.

Energy


Consistent Net Inflows Across Seven Consecutive Months in Small Cap

In September 2024, the small-cap segment saw a remarkable surge in investor interest, with a total net inflow of ₹35,590.95 crore. This represents a significant increase from August's ₹13,270.85 crore, showcasing a strong revival of enthusiasm for small-cap stocks. The segment accounted for a substantial share of total market inflows, reaffirming its position as an attractive option for investors seeking high growth potential. This notable uptick highlights the renewed investor confidence in small-cap investments, further emphasizing their appeal in a diversified portfolio amidst changing market conditions.

Top Small-cap Stocks with Mutual Fund Inflows in September 2024

Stock Name

Sector

Krishna Institute of Medical Sciences Ltd

Financials

Sapphire Foods India Ltd.

FMCG

VST Industries Ltd.

FMCG

Indigo Paints Ltd.

Chemicals

K.P.R. Mill Ltd.

Textile


Top Small-cap Stocks with Mutual Fund Outflows in September 2024

Stock Name

Sector

Central Depository Services (India) Ltd.

Financials

Zee Entertainment Enterprises Ltd.

Media and Communications

Kaynes Technology India Ltd.

Capital Goods

Granules India Ltd.

Healthcare

IIFL Finance Ltd.

Financials

Conclusion:


September 2024 showcased a dynamic landscape for the mutual fund industry, with significant inflows across various segments, particularly in SIPs and large-cap funds, reflecting robust investor sentiment towards disciplined wealth accumulation. The remarkable rise in net inflows, especially in small-cap and mid-cap stocks, underscores a renewed confidence among investors seeking growth opportunities amid market fluctuations. However, the cautious approach in certain sectors, such as Consumer Durables, highlights ongoing market uncertainties. As investors continue to navigate this evolving environment, the trends observed in September indicate a strategic shift towards diversified investment strategies, emphasizing the importance of adaptability in portfolio management.