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Fund house with most equity holding just did a major portfolio overhaul

SBI Mutual Fund, the largest investor in equities among mutual fund houses, went shopping for power, energy and banking & financial stocks in September, a month that saw the government announce a major corporate tax cut to boost growth.

The fund house bought over two crore shares of Axis Bank in September amid buzz that the government may offload a part of its stake in the lender held via Specified Undertaking of Unit Trust of India (SUUTI). The stock climbed over 3 per cent in the month.

Analysts have been largely bullish on the private lenders, including Axis Bank lately. “If I want to play safely, I will buy HDFC Bank. If I want to play re-rating, I will buy ICICI Bank and Axis Bank. If at all I want a risk-on trade, I will go for IndusInd Bank. These are the three-four names that I would stick to in the banking space,” said Gautam Shroff, Co-Head for Institutional Equities at Edelweiss.

SBI Mutual Fund bought a number of stocks from the financial services sector, including ICICI Bank, HDFC Bank, Chola Investment and Finance and City Union Bank. The last name was a new addition to its portfolio.

SBI-MF-stocks

City Union Bank has been delivering steady returns to investors through these tumultuous times. At a time when a whole host of bank stocks — YES Bank, IDBI Bank, The Federal Bank, State Bank of India — have disappointed, City Union Bank shares have rallied 13 per cent on a year-to-date basis. The scrip has delivered 1,100 per cent return in last 10 years.

Apollo Tyres, Ipca Laboratories and Prestige Estate were among other stocks SBI MF added to its portfolio during the month. Meanwhile, it completely exited Eris Lifesciences, IndiaMART Intermesh, Eveready Industries, Indian Energy Exchange, Mayur Uniquoters, NBCC and Raymond.

Among the asset manager’s top 30 buys in September, power and energy stocks featured prominently. They included BPCL, Power Grid, GAIL India, JSW Energy, Indian Oil, ONGC, GE T&D India and Power Finance.

In September, BSE Power index climbed 2.5 per cent. This jump came on the back of a 10 per cent drop in the index in the previous two months. BSE Energy index, on the other hand, surged over 8 per cent during the month.

The fund house sold more than 3.5 crore shares of Tata Power in September, followed by Indiabulls Housing (39 lakh) and SBI (35 lakh). It also shed shares of capital goods and IT companies like Bharat Electronics, BHEL, Wipro and Infosys.

IT companies have lost favour on Dalal Street lately. UBS and IIFL both are underweight on the IT sector. Nifty IT index has been flat on a year-to-date basis.

SBI MF is the largest equity investor among asset management companies in India with total equity exposure of Rs 1,47,422 crore. Overall, its assets under management stood Rs 3,17,627 crore at the end of September, making it the third largest fund housing in the country.
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