A sneak peek into what mutual fund managers are doing could give you some stock-specific ideas that have already returned spectacularly in the last year or so.
Making money in any stock market is hard, especially in one rife with volatility. If you are an expert at picking stocks, you can use the volatility to your advantage and pick quality stocks whenever they correct.
But if you belong to the other camp, a sneak peek into what mutual fund managers are doing could give you some stock-specific ideas that have already returned spectacularly in the last year or so.
The Sensex might have gained around 15 percent in that period, but there are 10 stocks that fund managers kept steadily buying, which have returned 100-200 percent, according to data compiled from AceEquity.
Stocks on which fund managers are betting heavily include names like Jindal Steel & Power, which has shot up 248 percent, Escorts, which has gained 227 percent, and Nocil, which has risen 220 percent since December 30, 2016, the data showed.
Other stocks that rose over 100 percent include names like Jamna Auto, Tata Metaliks, Tata Global Beverages, Jaiprakash Associates, Bajaj Finance, and Hatsun Agro. Shoppers Stop, which pared its gains recently, had risen nearly 100 percent in the period under review.
What should investors do?
According to the Association of Mutual Funds in India (AMFI), the assets under management (AUM) of the Indian mutual fund industry declined to Rs 21.36 lakh crore in March from Rs 22.20 lakh crore in February.
So, should investors stick to stocks on which fund managers are betting? Well, experts feel they should look at stocks that are market leaders and have a potential to grow, and not blindly follow what fund managers are buying or selling.
"Looking at the current market scenario more weightage has to be given to market leaders stocks which possess high quality in small and midcap," Chirag Singhvi, Fundamental Analyst at KIFS Trade Capital.
"Undoubtedly, timing the market would be inappropriate at any moment, but considering recent price wise correction, better ROE, Valuations, and opportunity backed by the strong data analysis, the better prices are to be gauged and accumulated in the portfolio for making it a value bet," he said.
Singhvi added that sectors like IT, consumption, pharma & FMCG have shown good strength. Investors with a long-term perspective should look forward to accumulating more and strengthening their portfolio.
Ajay Srivastava, CEO, Dimensions Consulting, feels the consumption sector should form at least a fifth of an investor's portfolio. In an interview to CNBC TV18, he said the sector is likely to outperform in the prevalent market environment and that smart money could well move from other sectors to high-quality consumption plays."Consumption might look overpriced with a high P/E but it is a wonderful space because there is no competition. Even at 5-7 percent growth rate, some 30-40 million new consumers are going to enter this space," Srivastava explained. "Consumers who are looking to set up their portfolio should be in this space with a minimum allocation of 20 percent in the current market environment."The Great Diwali Discount!
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