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    SBI MF dumps SBI, RIL, Axis Bank, ICICI Bank, HDFC Life to shift to midcaps Union Bank, Federal Bank, SJVN, IHC, NHPC

    Synopsis

    Select midcaps have since risen faster than largecaps. BSE Midcap index is now up over 50 per cent from its March level, while Sensex has risen 49 per cent. Analysts say there is more room over there, as the midcap benchmark is way off its historic high.

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    It is possible that some of these buy-sales were done by passively-managed index funds as per the portfolio mandates.
    NEW DELHI: As valuations of large-cap stocks neared pre-Covid levels in July, money managers at India’s largest mutual fund quickly shifted to midcap hoping for a rotating in the market rally.

    And the strategy seems to have paid off.

    Select midcaps have since risen faster than largecaps. BSE Midcap index is now up over 50 per cent from its March level, while Sensex has risen 49 per cent. Analysts say there is more room over there, as the midcap benchmark is way off its historic high.

    Navneet Munot, Chief Investment Officer of SBI MF, says his funds are sticking to a bottom-up approach for stock picking as there are real risks because of a retail frenzy, plateauing economic activity, a potential fiscal cliff in the US and uncertainty around the US Presidential elections.

    “While mean reversion in corporate profits is key to equity market performance in the medium term, liquidity rules supreme in the near term. The unprecedented crisis will have a profound impact on the complexion of winners and losers of tomorrow and identifying them early amid this chaos will be the biggest driver of alpha,” he said in a letter to SBI Mutual Fund investors.

    True to his words, Munot’s team did a fair bit of shopping in the midcap space all through July. Among some of their biggest additions, were City Union Bank (88 lakh shares), GE T&D India (54lakh shares), Federal Bank (34 lakh shares), SJVN (20 lakh shares). Others included Carborundum Universal, Indian Hotel, Motherson Sumi and Cholamandalam Investment.

    “This market is surprising everyday. People said the small guys are going to get wiped out post-Covid, and the big ones are going to get bigger. But smallcaps and midcaps have actually done much-much better,” says Atul Suri of PMS manager Marathon Trends.

    SBI Mutual Fund’s biggest addition to the portfolio in July was NHPC, where it bought 4.54 crore shares. Other major buys included Coal India, Petronet LNG, Sun Pharma, L&T and HCL Tech; where the fund house added 15-60 lakh shares.

    The shift out of largecaps was also visible in the way the asset manager sold stocks in July. Even as Dalal Street debated if investing in bank and financial stocks made sense given the impending NPA cycle, SBI MF was clear on which side of the debate it stood.

    The Munot-led team, which manages a portfolio worth over Rs 4.20 lakh crore, dumped stocks and booked profits in largecap banks and other financials along with select oil & gas players.

    They sold 15-84 lakh shares of SBI, M&M Financial Services, Axis Bank, ICICI Bank, HDFC Life Insurance and Punjab National Bank. Oil & gas majors like Gujarat State Petronet, Indian Oil and RIL also fell out of its favour.

    Besides, the fund house trimmed stakes in some of the underperforming names like Vedanta, Emami and ITC. It sold 2.86 crore shares of Vedanta, even as the company prepared to delist its shares from Indian bourses, besides 1.3 crore shares of Emami and nearly 36 lakh shares of the cigarette-to-notebook maker ITC.

    The selloff in largecaps came in the backdrop of a drop in investment flows to equity funds for the fourth straight month in July. That appears to have forced the fund to end July with net sales of Rs 10,000 crore of shares.

    Meanwhile, the fund house took new positions in Chennai Petroleum Corporation, Glenmark Pharma, L&T Tech Services, Mayur Uniquoters, Rossari Biotech and SBI Cards even as it completely exitted Accelya Solutions India and Precision Camshafts. .

    It is possible that some of these buy-sales were done by passively-managed index funds as per the portfolio mandates.

    SBI MF continued to be the top fund manager in the country at the end of July with assets worth Rs 4.20 lakh crore widening the gap from its close rivals HDFC AMC’s Rs 3.65 lakh crore and ICICI Pru AMC’s Rs 3.64 lakh crore.




    ( Originally published on Aug 13, 2020 )
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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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