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Stock Analysis, IPO, Mutual Funds, Bonds & More

Top fund houses wagered on many contra bets this May

Total AUM of the mutual fund industry stood at Rs 25.43 lakh crore at the end of May

, ETMarkets.com|
Jun 11, 2019, 11.36 AM IST
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Top domestic fund houses took note of the political stability post-election results and lapped up shares in many perceptibly contrarian bets in May, hoping for a recovery in the battered sectors such as telecom, power, pharma and metals.

Select auto ancillary and bank stocks also attracted institutional money during month.

Total assets under management (AUM) of the mutual fund industry stood at Rs 25.43 lakh crore at the end of May, up from Rs 25.27 lakh crore in April end.

“As the new government came in with a thumping majority, this along with other positive factors such as low inflation, reasonable balance of payments and good forex reserve will continue to increase inflows,” said NS Venkatesh, Chief Executive Officer at Amfi.

The same optimism is visible also in the way top fund houses bought and sold shares all through the past month.

HDFC Mutual Fund
India’s largest money manager held Rs 1.51 lakh crore in equities, with maximum allocations to financials, utilities and industries.

The fund house added 3 crore shares of government-owned capital goods firm BHEL in a clear bet on public sector capex. Its other top picks included Federal Bank (1 crore shares), Bank of Baroda (94 lakh), DCB Bank (86 lakh) and Power Finance Corporation (70 lakh) – a play on banking revival.

The fund house also added over 10 lakh shares of BPCL, Aurobindo Pharma, Sun Pharma, Bharti Airtel, Karur Vysya Bank, Hindalco, Lupin and Adani Power.

Meanwhile, it sold over 1 crore shares each in public sector firms NPTC, SBI and PowerGrid and between 40-90 lakh shares of Orient Cement, HSIL, Petronet LNG, Ambuja Cement, NBCC and ICICI Bank.

The fund house completely exited Havells, ICICI Bank, South Indian Bank and Vodafone Idea.

ICICI Prudential Mutual Fund
With equity assets in excess of Rs 1.32 lakh crore as of May 31, the fund house wagered on a potential telecom revival, buying 6.12 crore shares of Vodafone Idea and 3.90 crore of Bharti Airtel.

The two telecom operators introduced a ‘minimum recharge’ regimes last month, weeding out low-paying users and increasing average revenue per users (Arpu) in early signs of return of pricing power.

The fund house also bought shares of NTPC (1.52 crore), Motherson Sumi (1.36 crore), Hindalco (87 lakh), HDFC Life (68 lakh), Union Bank (61 lakh), Neyveli Lignite (46 lakh) and Infosys (44 lakh).

It sold over 75 lakh shares each in public sector companies Coal India, SBI and ONGC.

CIO S Naren told ETMarkets.com last month said he is positive on power, metals, auto ancillaries and telecom.

He said there is an opportunity to own healthy power franchises, which are pricing in the worries of the sector more than adequately. In the auto ancillary space, valuations have corrected amid concerns over global growth, trade wars and change in emission norms.

He said telecom as the sector is at the bottom of the cycle, while valuations in the metals space look reasonable owing to uncertainties around US-China trade wars and slowdown in China. From a counter-cyclical viewpoint, the sector seems to be at the start of an upward move after a long period of poor returns, he said.

SBI Funds Management
The fund house had about Rs 1.62 lakh crore invested in about 318 stocks. It also gambled on telecom, buying over 1 crore shares each in Bharti Airtel and Vodafone Idea. The find house’s other top picks of May included Motherson Sumi (88.77 lakh shares), SBI (78 lakh), Bank of Baroda (78 lakh), ICICI Bank (47.99 lakh) and Tata Power (43 lakh).

The fund house offloaded over 25 lakh shares each in Exide Industries, M&M Financial Services, Havells India, ITD Cementation, Voltas, Redington and Muthoot Finance.

Aditya Birla Sun Life AMC
The fund house had about Rs 87,300 crore invested in 376 stocks as of May 31, 2019. During the month, it added 22 lakh shares of SpiceJet for the first time.

CEAT, Canara Bank, IIFL Securities, IIFL Wealth Management, Indian Bank, Oriental Bank and Tata Elxsi were some of the other stocks on its May shopping list.

The fund house completely exited DHFL, J Kumar Infraproject, JTEKT India, Mindtree, Reliance Infra, Sonata Software and Syndicate Bank.

With the addition of between 50-85 lakh shares, IDFC First, Sun Pharma, Bank of Baroda, DishTV and Bharti Airtel were among its top buys during the month. It offloaded over 20 lakh shares each in SBI Life, PNB, Hindalco, Tata Motors, MRPL and Vodafone.

Reliance Nippon Life AMC
Gujarat Alkalies, Somany Ceramics, Tata Elxsi and Time Technoplast were among some of the new additions to the portfolio of this AMC in May.

It exited Adani Enterprises, CPCL, IFCI, Jain Irrigation, NIIT Technologies and Ujjivan Financial.

The fund house added nearly 1 crore shares of Ashok Leyland and 97 lakh of ICICI Bank and 50-72 lakh shares in Bharti Airtel, SAIL and Tata Global Beverages.

However, it sold over 1 crore shares each in Coal India, IndianOil, ONGC and NTPC.

“We are a bit more value-centric but a lot of the stuff are bottoms-up. We like to include corporate banks, which are a bit of a consensus now, but broadly where you have a mix of two businesses, the retail and corporate, the retail business obviously is doing fine and for the corporate business, the pain is getting over. We think in the next two-three years, earnings will normalise. On normalised earnings two or three years down the line, large banks look quite cheap,” Manish Gunwani, CIO-Equity, Reliance Mutual Fund, told ETNOW.
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