After the Election…What they bought and sold

An election and a Budget later, the market appears to be heading back to its one-month ago levels. The period in between, however, was marked by high liquidity, what with foreign investors pumping in over Rs 3,830 crore.

Mutual fund investments, in comparison though, were a little pale, at Rs 839 crore. But, since the gross buys (about Rs 22,215 crore) were almost matched by the sells, the month may have seen mutual funds churn their portfolios significantly; especially since most of them missed out on the initial leg of rally.

Many funds may also have utilised the rally to unwind their positions in some stocks that they were forced to hold and instead move to more attractive bets. Here’s a look at what funds bought and sold last month and which stocks and sectors turned out to be favourites.

Sector choices

In a bid to ride the equity rally, fund managers appear to have added many high beta sectors to their portfolios last month. Stocks, predominantly from sectors such as oil and gas, software and banks, made it to the portfolios of many diversified equity funds.

While the expectations of a Big Bang Budget, with heightened emphasis on divestments and improving infrastructure, may have driven the funds to add to these sectors, fund houses continued to up stakes in defensives too.

Pharmaceuticals and consumer non-durable stocks also were bought last month. Funds, however, pared exposures to capital goods, metals and telecom.

Debt continued to lose favour, with funds cutting their exposure by over 15 per cent, in their keenness to up their stakes in equities.

Stock picks: What’s in?


NTPC was among the most sought after of stocks last month, with more than 34 million shares of the company being accumulated by various fund houses. Dish TV, TCS, Alok Industries, Reliance Petroleum, Shree Renuka Sugars and Unitech were among the other stocks that funds added last month. In terms of top additions (market value) to the existing holdings of equity funds, Prime Focus topped the list; followed closely by Essar Oil, Network 18, Alok Industries, Prism Cement and Jay Shree Tea and Industries.

Overall, however, fund purchases were driven more by stock- and sector-specific preferences. While a majority of the stocks added sported a large market capitalisation profile, mid-caps stocks too, in some cases, featured in the list of top additions.

Unitech was one other popular stock to be bought by fund houses. The company’s ability to fund itself and reduce its debt through qualified institutional placements in two quick successions, may have provided some confidence to the buyers.

Swaraj Mazda and Allcargo Global Logistics were among the new stocks added to funds’ portfolios in June.

What’s out?


Telecom stock Idea Cellular was the stock most sold by mutual funds, with more than 12 million shares of the company making an exit from portfolios. GVK Power & Infrastructure, Tata Steel Kingfisher Airlines, GMR Infrastructure, Hindustan Construction and Axis Bank were among the other stocks on the MF sell radar.

Here, again, quite a few of the stocks sold belonged to the large-cap category, suggesting that portfolio rejigs were based more on stock-specific fundamentals and expectations. However some funds which held stocks such as Nirma, Ansal Properties, Bilpower and Rajesh Exports until May, fully exited these in June.