Mutual funds have been purchasing these mid-cap stocks. Did you buy any?

Domestic mutual funds have become very significant players in the local stock market over the last few years given the rush of local 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.

Indeed, the bull run of the past few months is largely attributed to the flow of cash into domestic mutual funds, which have pumped in a massive amount of money into the stock market.

However, Indian stock indices have been seeing a rush of money towards large cap stocks as investors, anticipating a correction, looked for safer investments rather than make riskier bets.

Although most local fund managers have been voicing concerns about valuations, quarterly shareholding data shows they pushed up their holding in over 200 listed companies. Of those, they increased their stake by two percentage points or more in around 18% of the companies.

In particular, they hiked stake in as many as 129 companies (as against 89 companies for FIIs) that have a valuation of $1 billion or more last quarter. Of these 129 companies, 67—or a little more than half—were mid-cap companies. In comparison, FIIs had increased their stake in 57 mid-cap stocks with a market valuation of Rs 5,000-20,000 crore last quarter. This shows local fund managers were more bullish about mid-cap counters than offshore investors.

Mutual fund managers were bullish on mid-cap banks, healthcare companies and drugmakers, NBFCs, automobile and auto component makers, real estate developers, and infrastructure companies.

Some of these are the same as the sectors backed by FIIs last quarter—financial services, construction, engineering and industrial.

Top mid-caps that saw MF buying

If we look at the pack of mid-caps with market cap between Rs 5,000 crore and Rs 20,000 crore, then MFs pushed up their stake in Indian Bank, Thermax, Prestige Estates, GR Infraprojects, Phoenix Mills, Gujarat State Petronet, Sundram Fasteners, Manappuram Finance, Sheela Foam and WABCO India.

Among others where MFs bought shares were Radico Khaitan, Poonawalla Fincorp, Century Plyboards, Timken India, Apollo Tyres, Birlasoft, Suven Pharma, Zydus Wellness, JB Chemicals, Cyient, KEC International, Bajaj Electricals, BASF India, RBL Bank and Narayana Hrudayalaya.

GR Infraprojects, Bajaj Electricals and Narayana Hrudayalaya were mid-cap stocks that figured among the buy calls of both FIIs and domestic MFs.

Further lower down the order were stocks like, City Union Bank, Amber Enterprises, Sterlite Tech, Birla Corp, V-Guard, Mahindra CIE, KIMS, Blue Star, Ratnamani Metals and MCX.

Meanwhile, in at least 13 mid-caps, mutual funds bought an additional stake of 2% or more last quarter. This pack includes GR Infraprojects, Can Fin Homes, MCX, Tatva Chintan Pharma, KIMS Hospitals, Apollo Tyres, Birlasoft, Manappuram Finance, Chalet Hotels, J B Chemicals, RBL Bank, Mahindra CIE Automotive and Indiabulls Real Estate.

GR Infraprojects and Indiabulls Real Estate had also significant buying by FIIs.