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‘Buy low, sell high’ at play as MFs pick up laggards, offload high-fliers

Inflows into equity mutual funds slowed down to a five-month low of Rs 6,015 crore for the month.

, ETMarkets.com|
Updated: Nov 14, 2019, 03.48 PM IST
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NEW DELHI: Money managers on Dalal Street were seen following ‘Buy low, sell high’ strategy in October, as they lapped up shares of many beaten down names instead of performing stocks to generate alpha.

Inflows into equity mutual funds slowed down to a five-month low of Rs 6,015 crore for the month, which also put pressure on the fund managers to deliver.

Data showed fund managers lapped up Rs 2,116 crore worth of Infosys shares in October, as the scrip dived 15 per cent following a whistleblower complaint.

At the same time, the funds were seen trimming Rs 1,052 crore worth of shares in TCS. That even when the scrip gained 8 per cent.

Infosys shares fell 14.87 per cent to Rs 685.50 at the end of October from Rs 805.30 at the end of September. It even tested a low of Rs 615 during the month after a whistleblower letter emerged, accusing CEO Salil Parekh and CFO Nilanjan Roy of indulging in ‘unethical practices’ to boost short-term revenues and profits.

The IT firm strongly refuted the claims, but the stock exchanges pulled up the IT firm for not disclosing the particulars of the whistleblower report to public shareholders.

Money managers offloaded shares worth Rs 470 crore in RIL, as the stock of the Mukesh Ambani-led company hit a record high of Rs 1,489 on October 31. They bought Rs 692 crore worth of shares in UltraTech Cement, whose stocks fell 4 per cent during the month.

ICICI Bank saw biggest MF selloff at Rs 1,399 crore worth of shares in October, as the scrip jumped 7 per cent for the month, data showed. HDFC, whose shares gained 8 per cent during the month, saw Rs 445 crore worth of MF selling.

Domestic funds added Rs 560 crore worth of L&T shares, even as the scrip traded flat through the month.

INDIADAD
Table source: Edelweiss Securities
The trend was consistent with the September quarter shareholding pattern, where 14 of 17 Nifty companies where DIIs had upped stakes by at least 100 basis points failed to match index returns year to date.

Out of 2,300 actively traded stocks on BSE, 390 delivered double-digit returns for October. The market breadth remained mixed for the month, as half of these stocks ended lower, even as the benchmark indices climbed 3-5 per cent.
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