The month of November delivered a divided verdict on the direction of equities. While it may never be easy to call the market direction with perfection, what retail investors can do is take cues from the way the various mutual fund managers, known for their investment acumen, fare.
Last month, though a few retail investors opted out of market, what with high redemptions reported in equity schemes over the month, fund-houses did undertake their usual realignment in weights to sectors and stocks.
Though only an indicator, tracking what mutual fund houses buy and sell every month can go a long way in helping retail investors build their equity portfolio. Here's a look at what the many fund managers bought and sold last month.
Last month, though a few retail investors opted out of market, what with high redemptions reported in equity schemes over the month, fund-houses did undertake their usual realignment in weights to sectors and stocks.
Though only an indicator, tracking what mutual fund houses buy and sell every month can go a long way in helping retail investors build their equity portfolio. Here's a look at what the many fund managers bought and sold last month.
Sector Choices
Driven by the need to fortify their portfolios as also diversify sector exposures, fund houses appear to have added exposure to sectors such as hotels, oil and gas and minerals. They, however, pared exposure to telecom equipment, auto ancillary and paper products.
Another interesting sidelight was that funds reduced their exposure to the consumer non-durables sector. Even as the telecom sector was being de-rated by analysts — with players aggressively slashing rates — fund-houses stepped in as buyers. Most funds seem to have used the price correction in telecom stocks to accumulate them.
Yet another trend was the increased debt allocation in fund portfolios compared with the levels seen the previous month. The move to debt may have been driven by the funds' dividend declarations and higher redemption obligations.
What's in?
Hindalco appeared to have attracted the most attention last month, with fund holdings in the stock increasing by more than 63 per cent over October to 8.24 crore. Among the other stocks that saw accumulation were Indian Hotels, Spice Jet, ITC, Mercator Lines and Pantaloon Retail.
Even the newly-listed stock NHPC managed to attract buying interest. Metal stocks such as Adhunik Metaliks and SAIL also drew significant interest; while the former stock saw an addition of 88 lakh shares; holdings in the latter went up by 22 per cent.
What's out?
The quarterly earnings numbers weren't reason enough for MFs to hold on to the auto ancillary stock Apollo Tyres, which topped the list of stocks sold. Over 91 lakh shares of the company moved out of the funds' portfolio.
However, in terms of market value, it was Jaiprakash Associates, Hindustan Lever, Unitech and Suzlon Energy (in that order) that topped the ‘sell' list. Another interesting trend — while funds added stocks from oil refineries, they diluted their holdings in oil market companies such as HPCL.
What mid-cap funds bought
Mid-cap funds too had their share of action. Software stock Hexaware rose to be the most sought after stock in the mid-cap space, followed by Everonn Education, Dena Bank, Brigade Enterprises, and Vijaya Bank. A few large-cap names also figured in the ‘buy' radar, with Adani Power, NTPC and JSW Steel making their way into mid-cap funds' portfolios.
What they sold
Fund houses focussed on mid-caps, however, diluted more than 67 per cent of their holdings in Indiabulls Financial Services.
They also selectively pruned their holdings in the cement space, with stocks such as India Cements, Kesoram Industries and Mangalam Cement losing preference.
Among other notable stocks that moved out were Tata Steel, Jet Airways, and Everest Kanto Cylinder. While funds preferred mid-cap education service provider Everonn Education, they seem to have diluted their exposure in sector leader Educomp Solutions.
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