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Top 10 mutual fund picks that withstood market mayhem to cushion fall in returns

The top gainer on the list is environment and water management firm Ion Exchange.

, ETMarkets.com|
Updated: Sep 05, 2019, 01.22 PM IST
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Centrum Broking has an ‘add’ rating on SpiceJet with a price target of Rs 160.
When 80 per cent of the stocks in the domestic market have seen wealth erosion in the ongoing selloff, even the seasoned money manager has not remained unscathed.

As many as 345 of the Nifty500 stocks are currently trading in the red in terms of 2019 returns. While BSE Sensex is up 0.85 per cent year to date, BSE Midcap and Smallcap indices are down 14 per cent and 16 per cent, respectively.

In tandem, majority of the equity funds have either slumped into the negative territory or turned flat, as 80 per cent of their stock picks have wiped off wealth so far this calendar year.

But a handful of stocks have gone against the tide and delivered up to 75 per cent return, cushioning some of the fall.

Domestic equity funds held 1,006 stocks in their kitty as of June 30, 2019. according to Ace Equity. Out of them, only 192 managed to log gains and cap the downside of various fund schemes. There are 356 stocks in which money managers increased their stakes between December, 2018 and June, 2019.

The top gainer on the list is water and environment management business firm Ion Exchange. Mutual funds’ holding in the stock has increased to 4.21 per cent as of June 30 from 4.17 per cent on December 31. The scrip has risen 74 per cent to Rs 654 on a year-to-date basis till September 3.

Reliance Capital Builder Fund IV Series C had 4.21 per cent stake in Ion Exchange as of June 30, while renowned investor Rakesh Jhunjhunwala and Mukul Agrawal held 5.46 per cent and 1.71 per cent stakes in the company, according to BSE website.

Among others, Garden Reach Shipbuilders (up 45 per cent), SpiceJet (up 42 per cent), Just Dial (up 40 per cent), HDFC Life Insurance (up 39 per cent), Fairchem Speciality (up 38.87 per cent), SRF (up 36.93 per cent), Godrej Properties (up 36 per cent), SBI Life Insurance Company (up 36 per cent) and Brigade Enterprises (up 35 per cent) are other top performers in which mutual funds increased their stakes during the first half of 2019.

Garden Reach reported a 223 per cent year-on-year profit growth to Rs 25.30 crore in June quarter. That, even as net sales of the company declined 12 per cent YoY to Rs 168 crore. Veteran investor Ramesh Damani and fund houses HDFC AMC and Reliance Mutual Fund held stakes in the company as of June 30.

Aviation major SpiceJet reported its highest ever quarterly profit for June quarter thanks to higher passenger traffic following the grounding of Jet Airways. The company’s standalone profit climbed to Rs 261.7 crore in June quarter from a Rs 38.1 crore loss in the corresponding period of the previous financial year.

Centrum Broking has an ‘add’ rating on SpiceJet with a price target of Rs 160.

Among top laggards, stocks like GFL, Siti Networks, Vodafone Idea, Simplex Infra, IG Petrochemicals, Khadim India, Tejas Network and V2 Retail have slipped between 50 and 95 per cent so far this year.

Reliance Nippon Life Asset Management and Aavas Financiers delivered over 50 per cent returns year to date. However, money managers reduced their holdings in both companies during the first half of 2019.

Gautam Chhaochharia, Head of India Research, UBS, says the market outlook is definitely not looking rosy amid depressed Indian macros.

“In the short term, we clearly see some more downside potential. That will depend on how quickly the policy makers respond to the slowdown. On a longer term basis, market valuations are looking more supportive,” he told ETNOW.

Only those stocks in which fund houses increased their holding during the first half of 2019 were considered for this study. The list was further shortened to include only those firms in which fund houses held a minimum of 1 per cent stake as of June 30.

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