InvestorQ : Do mutual funds seem to be renewing their confidence in cyclical?
natasha Samani made post

Do mutual funds seem to be renewing their confidence in cyclical?

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Neha Samdani answered.
7 months ago
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Mutual funds seem to be renewing their confidence in cyclical. The domestic mutual funds increased exposure to cyclical sectors including banking, capital goods, retail, and automobiles in December amid ebbing risk of the third wave of the pandemic to the GDP growth. Cyclical sectors tend to benefit the most from an economic recovery.

According to the data from Motilal Oswal Financial Services, the domestic funds raised the weight of cyclical in their portfolio by 160 basis points year-on-year to 58.8% in December. The capital goods sector reported the highest traction among the domestic cyclical amid the capital expenditure recovery theme followed by the public sector banks and retail. The weight of capital goods companies in the domestic funds’ portfolio rose to 5.9%; it was 240 basis points higher than its weight in the BSE 200 index. Over 15 out of the top 20 funds are currently overweight in the capital goods sector. Robust tenders and rising orders improved the prospects of the capital goods sector.

The domestic funds extended the CAPEX theme to the PSU Banks, which tend to have a greater share of corporate lending. The total bank credit growth was at a 26-month high of 9.2% in December. This brought back the PSU banks segment in the top 10 sectors by weight in the domestic funds’ portfolio.
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Neha Samdani answered.
7 months ago
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Yes, this is going to be one of the future investments.
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