Axis Bank among 20 stocks that made crorepati investors richer last month

NEW DELHI: Some of India's top PMS funds, used by crorepati investors to park their surplus capital, managed to outsmart Nifty by a decent margin by betting on select bank stocks and PSUs in October. The list of top picks included Axis Bank and Coal India, which returned 23.5% and about 16%, respectively, last month.

Trivantage's Focussed Corp Lenders fund, which generated a return of 7.47% in the month of October, was heavily biased towards ICICI Bank with a weightage of 26.5%. Axis Bank was the second largest bet, followed by SBI, HDFC Bank and IDFC First Bank.

Out of the top 5 best performing PMS funds last month, private lender Axis Bank is owned by 3 of them, shows data from PMS Bazaar.

Among the best performing stocks in largecap peers, the bank counter is the sixth largest bet for mutual funds as well with total holdings estimated to be worth over Rs 63,000 crore.



Asit C Mehta's Ace 15 largecap fund was overweight on ITC, Coal India, Eicher Motors, NTPC and L&T. The largecap PMS fund outperformed with a return of 7.36% in the festive month when Nifty delivered 5.37%.

Chanakya Capital's Growth Plan fund, which returned almost 7%, had Axis Bank as its top holding, followed by Bajaj Holdings, HDFC Bank, Blue Dart Express and Bombay Burmah.

Asit Mehta's Ace Multicap fund was more biased towards PSU stocks with Cochin Shipyard, RITES, Bharat Dynamics and Bharat Electronics among 5 largest bets.

Amid sectoral churning in the market, investors have been making a beeline to buy PSU stocks, many of which are trading at attractive valuations and also come with a good dividend yield.

Magadh Capital's Value For Growth fund was seen allocating over 9% of its assets under management (AUM) on India's largest lender and PSU bank SBI. ICICI Bank, PG Electroplast, Axis Bank and Titan were other top holdings in October.

What should investors do?
While ICICI Bank and HDFC Bank are among the top two consensus picks of both brokerages as well as mutual funds, PSU banks have been outshining amid solid growth in their corporate loan books.

Global brokerage BofA Securities says PSU banks have been narrowing the gap with private lenders on many metrics. It sees Bank of Baroda leading the way due to a diversified/safer book and a more advanced digital strategy.

Following the just-ended quarterly earnings season, Motilal Oswal said top earnings upgrade was seen in Coal India (27%), Axis Bank (17%), SBI (13%), Hindalco (13%) and Britannia. On the other hand, downgrades were noticed in the case of Tata Motors, Divi’s Labs, Asian Paints, Reliance Industries and Wipro.

While the global economy has been giving signs of a slowdown, the urban demand in India has been robust. Most analysts, therefore, suggest investors to pick stocks related to domestically-oriented sectors where earnings are likely to continue to hold.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)