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Business News/ Market / Stock-market-news/  Mutual funds trim metals, retail holdings, tank up on financial stocks in September
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Mutual funds trim metals, retail holdings, tank up on financial stocks in September

According to data from Value Research, six out of 10 large-cap stocks bought most by mutual funds in September were financials

The most bought stock was Yes Bank Ltd, with asset managers spending Rs7,267.84 crore on it. Photo: Madhu Kapparath/MintPremium
The most bought stock was Yes Bank Ltd, with asset managers spending Rs7,267.84 crore on it. Photo: Madhu Kapparath/Mint

Mumbai: Mutual funds flocked to financial stocks in September attracted by their growth prospects even as they sold metal and retail stocks to cash in on the recent rally in these sectors.

According to data from Value Research, six out of 10 large-cap stocks bought most by mutual funds in September were financials.

“Predominantly, consumer lending is picking up. Due to lower cost of funds, there is uptick in margins for the intermediaries in this segment," said Gopal Agrawal, chief investment officer (equities) at Tata Asset Management Co. Ltd. “Some corporate lenders were also preferred due to stock-specific positives and valuations," he added.

Others shared the view.

“We believe retail-focused lenders will continue to grow well, and in fact, drive growth the most in the sector, and we remain invested in that space," said Harsha Upadhyaya, chief investment officer (CIO)-equity at Kotak Mahindra Asset Management Co.

“We are not upbeat on corporate and PSU lenders, as the ghost of NPAs (non-performing assets) still bothers them," said Upadhyaya.

The most-bought stock was Yes Bank Ltd, with asset managers spending Rs7,267.84 crore on it. Other top preferred stocks were HDFC Bank Ltd, ICICI Bank Ltd, Bajaj Finance Ltd, Housing Development Finance Corp. Ltd (HDFC), and State Bank of India.

“Financials have a huge weight in the Sensex. After demonetisation, the cost of deposits came down faster than that of assets, and that has kept these stocks attractive," said Ritesh Jain, chief investment officer, BNP Paribas Mutual Fund.

“That said, NPAs (non-performing assets) continue to bother and going ahead, insurance could be one of the preferred pack in the BFSI (banking, financial services and insurance) space going ahead," Jain said.

Metal producers and retail chains figured were among the most-sold large cap stocks as asset managers locked in gains after the recent rally in the pack.

Fund managers sold Rs346.09 crore of Vedanta Ltd and Rs97.07 crore of Tata Steel Ltd. The BSE Metals index rose 43.8% in the first nine months of 2017.

Avenue Supermarts Ltd, which runs retail chain D-Mart, was the seventh most-sold stock by mutual funds last month, at Rs126.30 crore. The company went public on 21 March, and had gained 291% from its issue price until 30 September.

Fund managers sold Rs105.09 crore of Future Retail Ltd in September. The stock has gone up four-fold since the start of 2017 to the end of September.

“Profit-booking seems to have been triggered for metals and retail-focused stocks, as asset managers trimmed some positions there," said Agrawal of Tata.

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Published: 23 Oct 2017, 12:43 AM IST
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