Mutual funds stock up on banks in December
funds stocked up on bank stocks in December in the large cap segment, as fund managers expecting long-term growth in Asia’s third-largest economy continued to place their bets on lenders.
Punjab National Bank was the most bought large cap stock by domestic fund managers, as the country’s secondlargest state-run lender raised ₹5,000 crore in a share sale to institutional investors. Asset managers bought ₹1,192 crore of the stock in December, data from Morningstar showed.
“Financials have always been in favour with fund houses and are their largest holdings, particularly the top banks — HDFC Bank, ICICI Bank and State Bank of India,” said Kaustubh Belapurkar, director of fund research at Morningstar Investment Adviser India Pvt Ltd
“While recent GDP (gross domestic product) estimates have been pointing to a slowdown due to initial hiccups on reforms implementation, the long-term economic growth story is very promising,” added Belapurkar.
Earlier this month, India’s statistics office projected the economy to slow to 6.5% in 2017-18 from 7.1% a year ago. The economy has been hurt by the lingering impact of demonetization and disruptions caused by GST (goods and services tax).
However, World Bank’s Global Economic Prospects report released after this data said that after conceding its position as the fastest growing major economy to China for a year in 2017, India is likely to reclaim the position in 2018, with growth expected to accelerate to 7.3% in the year,
Fund managers also bought HDFC Bank Ltd shares worth ₹1,049 crore, and ICICI Bank Ltd shares worth ₹436 crore in the month.
That was the common view. Engineering and construction firm Larsen & Toubro Ltd was the second-most bought stock by mutual funds in December, as they purchased ₹1,083 crore of the stock in the month.
“Fresh NPA (non-performing assets) formation is coming down, and fund managers are liking banks, from medium term perspective,” Agrawal added.
Infosys was the most sold stock, after the country’s second-largest software exporter completed ₹13,000 crore share buyback in December. Fund managers offloaded ₹1,541 crore of the stock last month.
MUMBAI:Mutual