Check out the mid-cap stocks mutual funds have been selling

by 5paisa Research Team Last Updated: Dec 11, 2022 - 01:13 am 45.5k Views
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Indian mutual funds have become a dominant force in the equity markets in recent years thanks to greater awareness among retail investors and a rush of liquidity. In fact, MFs are now almost as strong as foreign portfolio investors (FPIs) or foreign institutional investors (FIIs), which have been the driver of local bourses historically.

It’s not a surprise, then, that the bull run this year is largely attributed to the flow of cash into MFs, which have pumped in a massive amount of money into the stock market.

However, the MFs have bought and sold many stocks over the past few months as they reshuffle their portfolios amid concerns of a correction after stock markets hit new records. Indeed, the markets have been in a consolidation mode this month.

While most local fund managers have been voicing concerns about the state of valuations of late, quarterly shareholding data shows they pushed up their holding in over 200 listed companies.

On the other hand, the MFs also cut their stake in an equal number of companies during the quarter ended September 30 spread across large cap, mid cap and small cap segments.

Overall, mutual fund managers cut their holding in 46 mid-caps with current market valuation of Rs 5,000-20,000 crore last quarter. For comparison, FIIs snipped their stake in around 54 mid-cap stocks.

Interestingly, mutual fund managers also bought an additional stake in 67 mid-cap companies in the three months ended September 30. This means local fund managers were more bullish than bearish on the mid-cap counters.

Notably, FIIs also bought additional shares of more mid-cap stocks than the number of firms where they snipped their holding but there the split was almost equal. However, data for the domestic fund managers reveals they were still overweight on the mid-caps.

Top mid-caps that saw MF sell calls

If we look at the pack of mid-caps with market value between Rs 5,000 crore and Rs 20,000 crore, then MFs reduced their stake in Grindwell Norton, Sumitomo Chemical, Kajaria Ceramics, Alkyl Amines, Affle India, CDSL, Natco Pharma, Exide Industries, IIFL Wealth Management, Cholamandalam Finance, Castrol and CESC.

Among others with market value upwards of Rs 10,000 crore, Route Mobile, SJVN, Redington, Fine Organic and Indigo Paints saw MFs snip their stake.

Further down the order, local fund managers sold shares of Eris Lifesciences, Sundaram Clayton, KEI Industries, HFCL, IDFC, NLC, Intellect Design, Graphite India, Vaibhav Global, Finolex Cables, NBCC, Granules, AstraZeneca, Tata Investment, Rail Vikas Nigam and Bombay Burmah Trading.

Redington, Affle, Route Mobile and Natco were also among the mid-cap counters that had witnessed offshore investors pare their holding last quarter.

Meanwhile, as against 20 mid-caps where FIIs cut their stake by 2% or more, there were no such stocks in the set with significant reduction by local fund managers last quarter. The sharpest stake sale was limited to just 0.4% in Affle, Graphite India and Finolex Cables.

MFs cut their stake by 0.3% each in Grindwell Norton, Kajaria Ceramics, Fine Organic, NLC India, Prism Johnson, Mahindra Logistics and Johnson Controls.

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