Fund managers increased their stakes in 243 BSE500 firms, 17 Sensex stocks in Q3; a quick look at those stocks’ performances.
As per the latest data of December 2019 from Association of Mutual Funds in India (AMFI), Indian mutual funds have added a whopping Rs 3.15 lakh crore, or 13 percent, to their asset base in 2019 raising it to to Rs 26.77 lakh crores, as against Rs 23.62 lakh crores a year ago.
On a positive side, Avanti was the top pick that almost doubled money during the 4 months period. Apart from that, Gujarat Gas, Jindal Steel & Power, IRB Infra, Essel Propack and Adani Enterprises were among the top gainers in the mutual fund portfolios.
List of top 20 stocks based on returns.
| Company Name |
MF Holding in Sept Quarter (%) |
MF Holding in Dec Quarter (%) |
Return from September to January |
| Avanti Feeds |
1.70 |
2.38 |
95.33 |
| Jindal Steel & Power |
6.68 |
7.75 |
82.47 |
| Gujarat Gas |
5.06 |
5.71 |
66.54 |
| Narayana Hrudayalaya Ltd. |
4.06 |
5.64 |
59.67 |
| Adani Enterprises |
1.77 |
2.09 |
57.58 |
| Essel Propack |
1.00 |
1.33 |
56.26 |
| IRB Infra |
7.15 |
7.93 |
54.27 |
| eClerx Services |
19.58 |
20.46 |
54.04 |
| Steel Authority of India (SAIL) |
3.40 |
3.74 |
52.84 |
| Amber Enterprises |
5.93 |
5.96 |
50.84 |
| Westlife Development Ltd. |
7.92 |
8.00 |
49.66 |
| APL Apollo Tubes |
11.50 |
11.80 |
49.08 |
| Indian Energy Exchange |
7.12 |
7.56 |
47.27 |
| Coromandel International |
14.35 |
14.63 |
45.78 |
| Bharti Airtel |
8.84 |
9.29 |
42.70 |
| GMR Infra |
1.20 |
1.43 |
42.35 |
| Balkrishna Industries |
15.78 |
17.32 |
42.35 |
| Tata Global Beverages |
10.67 |
12.24 |
39.32 |
| Aster DM Healthcare |
3.73 |
3.99 |
38.82 |
| NIIT Technologies |
5.79 |
6.94 |
38.48 |
There have been stocks which gave negative returns as well. It has been observed that more than 50 percent of the companies in which fund managers increased their bets have given negative returns since September 2019. DHFL, Lakshmi Vilas Bank, Dishman Carbogen, Indigo, Chennai Petro, Aurobindo Pharma, Himadri Chemicals, and JustDial were among the stocks that sank in double digits during September-January period.
| Company Name |
MF Holding in Sept Quarter (%) |
MF Holding in Dec Quarter (%) |
Return from September 2019 to January 2020 |
| DHFL |
0.01 |
0.02 |
-58.53 |
| Lakshmi Vilas Bank |
0.00 |
0.01 |
-54.24 |
| Dishman Carbogen Amcis Ltd. |
12.12 |
13.22 |
-50.72 |
| Indigo |
5.23 |
5.54 |
-20.65 |
| TCNS Clothing |
4.15 |
4.34 |
-19.62 |
| CCL Products |
3.15 |
3.80 |
-18.46 |
| Chennai Petro |
10.10 |
11.37 |
-16.20 |
| GE T&D India |
12.29 |
12.38 |
-15.36 |
| Aurobindo Pharma |
12.66 |
12.78 |
-14.90 |
| Himadri Speciality Chemical |
2.14 |
2.19 |
-13.90 |
| GE Power |
13.83 |
14.09 |
-13.90 |
| Zydus Wellness |
2.83 |
3.25 |
-12.95 |
| Prism Johnson |
6.10 |
7.39 |
-12.02 |
| Just Dial |
8.20 |
9.67 |
-11.94 |
After a steep correction in the broader market space, fund managers are actively looking to grab the opportunities in the small & midcap space, those stocks can turn out to be top wealth creators in the year 2020. Midcaps and smallcaps have seen significant price correction in the last 2 years. This space seems to have now come out of the corrective phase and has shown good traction since the last quarter, primarily driven by attractive valuations and bottoming of growth concerns.
In 2020, we expect to see mid and smallcap space outperforming their big counterparts, with the exception that investor emphasis can not be reduced on quality largecaps. Fund managers smelled prospects in midcaps and small caps and have begun investing in these firms in the last few months.
MF investment in Sensex companies:
Fund managers increased their holdings into 17 Sensex companies sequentially in the December quarter. These include Axis Bank, Bajaj Auto, Bajaj Finance, Bharti Airtel, Hero MotoCorp, ITC, L&T and Maruti Suzuki.
They reduced stake in as many as 12 Sensex companies sequentially. The list includes Asian Paints, HCL Technologies, HDFC Bank, HDFC Ltd, M&M, ONGC, TCS and RIL.
Fund managers tend to raise stake in companies with strong fundamentals and are likely to post good performance in the long run once the momentum starts.
Stocks in which fund managers have increased the stake have solid long-term fundamentals and can yield returns of 20-30 percent here onwards. Until and unless we find any fundamental changes that could hamper the company's performance, we maintain an optimistic view on these stocks. The stocks in which fund managers have shown confidence in this quarter seem fundamentally sound if we look at the long-term horizon and the companies have also reported very bold quarter-on-quarter numbers along with strong year-on-year results.
The recent price downturn is a great opportunity to invest in quality mid and smallcap stocks, and while selecting, one also needs to look for companies with good profits, decent ROE, high EPS, and other valuations before making investment decisions.