“Our analysis of daily flows in March (up to 21st) across large categories has a few takeaways -- small-cap category has seen net outflows while mid-cap funds have seen positive but lower flows,” it said.

Categories such as large-cap, flexi cap, hybrid funds have seen uptick in flows suggesting a possible shift in preferences, the brokerage said.

Stock price performance for AMC stocks has been strong overall but quite divergent across AMCs with HDFC AMC (+110 per cent in 1Y) and Nippon (+110 per cent) outperforming ABSL (+46 per cent) and UTI (+23 per cent).

The sector as a whole is also now trading at 55-60 per cent premium to broader markets. This reflects similarly sharp relative differences in equity AUM growth across four AMCs. HDFC and Nippon have outperformed (60 per cent YoY) overall industry (50 per cent) and ABSL and UTI (30 per cent), Kotak Institutional Equities said.

Valuation premium for AMCs reflects key traits such as strong cash flow generation, high degree of transparency and predictability and well-aligned incentives across investors, distributors and asset managers. These are offset by key pushback such as predictability and sustainability of fund performance and structural fee pressure due to passives/regulations.