Funds Changed Course in Jan, Stocked Up on Big Guns Again
Most of them were out of favour over the past few years due to sectoral headwinds; MFs invested 10k cr-33k cr in these stocks
ET Intelligence Group: Index heavyweights such as HDFC Bank, ICICI Bank, State Bank of India (SBI), Larsen & Toubro (L&T), and ITC have again caught the attention of leading fund managers, shows the data on mutual funds portfolio for January. They invested between ₹ 10,000 crore and ₹ 33,000 crore in these stocks during the month.
This marks a shift in the strategy since most heavyweights were out of favour over the past few years. Rising bad loans in case of banks, uncertainty over the excise duty on cigarettes and their stagnating volume for ITC, and sluggishness in the order book for capital goods companies were some of the adverse factors. These companies are now emerging as value investments since fund managers believe conditions look favourable. For instance, cigarette major ITC reported better-than-expected vol- umes in the December quarter with moderate increase in unit sales price. In addition, lesser-than-expected excise duty increase of 6% in the Budget helped in attracting investors. ITC’s stock has contributed 12.5% to the total Nifty movement since January 1.
In case of top banking stocks, improvement in net interest income, growth in current account and sav- ings account (CASA) on a year-onyear comparison and improvement in asset quality were key positives. These factors prompted fund managers to enhanced exposure in SBI and ICICI Bank. L&T’s order inflows grew by 3% to ₹ 95,700 crore in the first nine months of FY17. The company’s order pipeline is worth ₹ 80,000 crore. It expects to retain momentum in the fourth quarter of the fiscal. For Maruti Suzuki, sales volume grew by 3.5% year-on-year in the December quarter reflecting lesserthan-expected impact of demonetisation. The company’s new models have reported better traction among customers, which is expected to support the future volume growth.