Moneycontrol
Jun 16, 2017 07:54 AM IST | Source: Moneycontrol.com

Bluechip bets! Top 10 stocks in which fund managers raised their stake in May

The total category wise asset under management (AUM) of the mutual fund (MF) industry slipped by 1.2 percent or Rs 22,327 crore to Rs 19.03 lakh crore for the month of May 2017, but equity funds saw an increase of 2.7 percent in the same period.

Bluechip bets! Top 10 stocks in which fund managers raised their stake in May

Kshitij Anand

Moneycontrol News

The total category wise asset under management (AUM) of the mutual fund (MF) industry slipped by 1.2 percent or Rs 22,327 crore to Rs 19.03 lakh crore for the month of May 2017, but equity funds saw an increase of 2.7 percent in the same period.

Of the top 10 stocks in terms of value increase on a month-on-month (MoM) basis, four were from Financials namely ICICI Bank, HDFC Bank, Kotak Mahindra Bank, and HDFC.

Apart from rate sensitive stocks, companies which hogged the limelight in the month of May include names like ITC, Infosys, Tata Steel, Maruti Suzuki, L&T and Vedanta.

Retail investors stepped up the purchase in the month of May as benchmark indices hit a fresh record high. The Nifty50 rose 3.4 percent in the same period.

“Major changes over the month in terms of a number of shares has happened in Kotak Bank and HDFC. In the case of Kotak Bank it has happened because of QIP of 6.2 cr shares during the month (out of which MFs added 1.62 cr shares in the month),” Deepak Jasani, Head - Retail Research, HDFC Securities told Moneycontrol.

“In the case of HDFC, MFs would have added positions due to the whole sector coming under the limelight in May 2017. Among other sectors, MFs bought Shares of metal companies like Tata Steel, Vedanta, JSW Steel, Hind Zinc and Hindalco as the outlook on these companies improved,” he said.

MFs

The AUM of Equity Fund increased by 2.7 percent or Rs 13,394 crore to Rs 5.18 lakh crore for the month of May 2017 over April 2017, IDBI Capital said in a report.

The assets of ELSS increased by 2.2 percent or by Rs 1,393 crore to a Rs65,192 crore, meanwhile Equity Fund registered net inflow of Rs10,208 crore and ELSS Fund saw a net inflow of Rs 531 crore, said the report.

Equity schemes witnessed inflows of Rs102 billion in May – the highest since June 2015. Equity AUM, as a percentage of total AUM, rose 100bps on a month-on-month basis to 27.2 percent in May. Equity AUM accounts for 4.1 percent of India’s market capitalization.

The month saw a notable change in the sector and stock allocation of funds. On a month-on-month (MoM) basis, the weights of private banks, metals, consumer, technology, auto and infrastructure increased, while those of healthcare, oil & gas, PSU Banks, cement, capital goods and utilities showed signs of moderation.

ICICI Bank, one of the preferred stocks among MFs in May, saw net buying by 10 funds. The value increased by Rs42.4b and the stock gained 17 percent for the month.

“Since banks are a play on the economy, they can sustain earnings growth for a long time. Particularly, ICICI Bank is attractively valued while HDFC and Kotak are high-quality stocks that have a track record of delivering superior returns,” Dr VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services told Moneycontrol.

“Expectation of rate cut is one factor, but that has already been factored in. In 2017 only one cut of 25bp can be expected,” he said.

There was good buying seen by MFs in the midcaps space. Fund managers increased their stake in Apollo Hospitals, Dabur India, Voltas, Hindalco, Power Grid etc. among others.

Vedanta, which entered the Nifty-50, was also one of the preferred stocks among MFs in May, with net buying by 14 funds. In the auto space, MF increased their stake in Tata Motors, and Hero Motocorp.

“The recent actions from States on Farm Loan Waivers shows Government's clear focus on rural India growth, the same was visible in the Financial Budget. This should help in rural demand for Autos and Two wheelers which got a setback post demonetisation,” Rajesh Shanbhag, Advisory Head – Alternate Channels, Way2Wealth Brokers Pvt. Ltd told Moneycontrol.

“Further good monsoon favouring India should also add icing on the cake for the sector,” he said.

There was some value buying seen in technology space as fund managers lapped up Infosys as well as TCS in the month of May.

“Stocks having good earnings visibility are very highly valued while stocks in industries like IT and pharma which are facing some headwinds are valued very low,” said Vijayakumar of Geojit Financial Services.

“Some quality names in both these segments are available at attractive valuations. There is the high margin of safety in these stocks at the present valuations,” he said.
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