Overall, fund manager remains upbeat on markets as domestic mutual fund (MF) industry average AUM increased for the 15th consecutive quarter in 2QCY17 to a new high of Rs19.6 trillion.
The Nifty50 which was trading well above 9900 on Monday and was just a few points away from the magical figure of 10,000, saw a gap down opening on Tuesday largely led by losses in ITC as investors preferred to dump the stocks after brokerage houses downgraded the stock.
Top global brokerage house pared their expectations with respect to ITC which holds one of the highest weightage in the Nifty which led to sharp fall in the index.
The stock saw a deep cut of 15 percent in trade after the Goods and Services Tax (GST) Council decided to increase the cess on cigarettes. Other stocks like Godfrey Phillips (down 10 percent) and VST Industries (down 10 percent) also caught in a bear grip.
Credit Suisse downgraded the stock to neutral from outperform and also slashed target price to Rs 310 from Rs 400 following cut in FY18-20 estimates by 10-12 percent.
Incidentally, fund managers also bought ITC in the month of June to the tune of Rs9.7 billion, said a report. For the month of June, In June, four of the top-10 stocks that saw maximum change in value was from Financials.
SBI, Aurobindo Pharma, Federal Bank, ITC and HDFC saw maximum value change on a month-on-month (MoM) basis while Reliance Industries, L&T, Tata Motors, ICICI Bank and IOC saw a maximum decline in value.
Overall, fund manager remains upbeat on markets as domestic mutual fund (MF) industry average AUM increased for the 15th consecutive quarter in 2QCY17 to a new high of Rs 19.6 lakh crore.
On a YoY basis, average AUM saw a 35 percent rise, primarily on account of inflows in growth (equity), income and liquid funds, backed by increased participation of domestic investors in equity schemes, said a Motilal Oswal report.
Equity AUM rose for the seventh consecutive month in June scaled to a new high of Rs 5.9 lakh crore (+1.3% MoM and +38% YoY). The increase in equity AUM was led by a rise in equity scheme sales while redemptions rose 38 percent on a MoM basis to Rs183 bn, it said.
In June, MFs showed interest in Healthcare, NBFC, Metals, PSU Banks, Consumer and Telecom as these sectors saw a MoM increase in weight.
On the other hand, auto, Oil & Gas, Capital Goods, and Technology saw a MoM decrease in weight. Private Banks (17.3%) was the top sector holding in June, followed by Auto (10.2%), Capital Goods (8.3%) and NBFC (7.2%), said the Motilal Oswal note.
Kotak Mahindra Bank, which entered the Sensex-30, was one of the preferred stocks among MFs in June, with net buying by 11 funds. Value increased by Rs3b, despite the stock delivering a negative return of 1 percent during the month.
Vedanta was also one of the preferred stocks among MFs in June, saw net buying by 12 Funds. Value increased by Rs6.5b; the stock was up by 4 percent for the month.Disclosure: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.