Bajaj Finance is the favorite mutual fund stock, ITC is the best-selling

  • Bajaj Finance was the most bought stock by mutual funds, followed by Maruti Suzuki.
  • ITC is where mutual funds have cut investment on profit booking after the stock soared 50% this year.
  • Despite a 57% drop in Zomato’s share price this year, mutual funds bought ₹505 crore of the stock.
  • One of the biggest laggards of the year – IT companies like Infosys, Wipro, HCL Technologies were also on the list of stocks sold by mutual funds.

Indian markets remained extremely volatile due to risky global indicators such as monetary policy tightening and potential recession. However, the return of Foreign Institutional Investors (FIIs) in recent months to Indian markets has encouraged some buying.

So far in FY23, foreign portfolio investors (REITs) have significantly reduced their holdings in IT, while stockpiling autos and consumer staples, according to a report by YES Securities. Mutual funds, however, bet on the financial sector and automotive stocks.

Here are the stocks in which mutual funds have increased their investments

Top 10 stocks where MFs increased their holdings Approximate purchase value
Bajaj Finance ₹1,071,000,000
Maruti-Suzuki ₹899crore
Kotak Mahindra Bank ₹676crore
Trust Industries ₹619 crore
Asian Paintings ₹545 crore
Hindustan Unilever ₹514,000
Zomato ₹505,000,000
SBI ₹471crore
Gland Pharma ₹463crore
SBI card ₹404,000,000

Source: YES Securities, July Data, Net Asset Value Database

Bajaj Finance is the first choice for the mutual fund industry
Bajaj Finance was the first stock that saw the most mutual fund purchases. Analysts say the company entered FY23 on a strong note, as evidenced by its FY23 first quarter numbers.

“This performance was achieved despite the continued disruption to business in the first half of the year, high credit costs and higher liquidity buffers. We believe that strong growth in assets under management and momentum in earnings would further accelerate from now on,” said a report from Sharekhan.

The report suggests that currently, Bajaj Finance stock offers an attractive buying opportunity as it has corrected more than 10% from its 52-week high.

“Furthermore, the digital transformation and omnichannel strategy bodes well for its growth goals as well as operational efficiencies going forward,” the report said.

Carmaker Maruti Suzuki India is another stock that saw the highest buys. The stock has jumped nearly 30% in the past six months as the company’s new launches have received strong reactions.

“Maruti Suzuki India is expected to witness a recovery in domestic demand with sales volume supporting growth, despite the short-term challenges of electronic component shortages. Selling requests remain strong with the order book currently at over 3.5 lakh units. The new launches, Brezza and Grand Vitara, received a strong response from customers, with orders for over 90,000 units in a short time. We expect the growth momentum to continue in fiscal 2023E, driven by normalizing economic activity and improving rural sentiments,” a Sharekhan report said.

However, the surprise in the peloton was Zomato. Despite a 57% drop in Zomato’s share price this year, it has found favor with mutual fund companies – with a purchase worth ₹505 crore.

MFs have reduced their investments in these stocks

Top 10 stocks where MFs died About. value of stock sold
ICC ₹1,020,000,000
Wipro ₹691crore
SBI life insurance ₹670,000,000
HDFC Bank ₹668crore
L&T ₹555crore
Dr. Reddy’s Laboratories ₹450crore
Ambuja cements ₹440,000,000
HCL Technologies ₹437crore
HDFC ₹427crore
Infosys ₹423crore

ITC was the top-selling mutual fund
ITC is the first stock on the list that has seen mutual funds reduce their investments. Interestingly, Kolkata-based FMCG-to-cigarette conglomerate’s stock has soared 50% this year, thanks to strong financials in previous quarters.

Aggregate industry data shows that most mutual fund companies have sold their stake in ITC. Most of the selloff in the stock could be due to profit booking, as a strong rally in the stock has been seen after many years.

PPFAS MF said that while the stock continues to be reasonably valued, its appeal has waned.

“We were buyers in ITC (previously) and most purchases were made between a price of ₹140 to ₹210. Although the stock continues to be reasonably valued, the attractiveness has obviously reduced a bit considering the share price has doubled from the lows,” said Rajeev Thakkar of Parag Parikh Financial Advisory Services ( PPFAS) Asset Management Company in a monthly fact sheet.

However, in July, PPFAS AMC reduced its holdings in ITC to 7.48% of its total assets under management (AUM) from 9.18% in June,

One of the biggest laggards of the year – IT companies like Infosys, Wipro, HCL Technologies also made the “sell” list.

The HDFC twins, which have struggled to produce returns this year, were also on the list amid ongoing proceedings to merge HDFC with HDFC Bank.

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