Top PMS funds picked these 12 new stocks last month. Should you follow suit?

NEW DELHI: Some of India's top performing PMS funds of last month were seen betting on two themes of consumption and capex after the Union Budget on February 1, as reflected in their stock picks.

Let's take a look at the top newly-added stocks of some of the top PMS funds:

Mararthon Trends' multicap Megatrends fund, which delivered a return of 3.35% last month, picked Siemens, ITC and Bharat Electronics in February, shows data from PMS Bazaar.

Nippon India's midcap fund Emerging India added two new stocks - Crompton Greaves and Indian Hotels.

NAFA's midcap fund Emerging Bluechip added Blue Star ahead of the beginning of what is expected to be a harsh summer season.

Tata's small and midcap oriented Emerging Opportunities fund picked Indraprastha Gas Ltd (IGL) while NJ Multicap fund added 5 new stocks to its kitty - JK Lakshmi Cement, Ingersoll-Rand, Godfrey Phillips, Finolex Cables and CCL Products.

Top bets
Marathon's biggest bet is smallcap multibagger stock Apar Industries, which has gone up by 250% in the last one year. Apar is also among the top bets of Composite Investments' multicap fund and Aequitas' smallcap fund, PMS Bazaar data shows.

Stallion's multicap fund, which impressed with a 3.26% return in February, is betting heavily on financials and new-age stocks as its top 5 bets are Bajaj Finance, Paytm, PB Fintech, HDFC Bank and APL Apollo Tubes.

What should investors do?
After the Union Budget hiked the capital outlay by 33% to Rs 2.4 lakh crore, analysts say capex is now gradually becoming the new growth driver.

"In Q3, capital goods companies reported strong margin expansion. This is usually a good lead indicator of a strong demand outlook (so that competitive intensity is less), better capacity utilisations or new capabilities that are not yet commoditized," said Prateek Agarwal of Motilal Oswal Asset Management Company.

Kotak Institutional Equities believes that banks are one of the few sectors in India, which offer reasonable visibility in earnings, and potential for rerating of multiples. "Valuations of most banks and NBFCs are well below their pre-COVID levels, whereas their fundamentals are much stronger," said Kotak's Sanjeev Prasad, adding that both Axis Bank and SBI are now trading at inexpensive valuations.

All eyes are now set on the Fed’s rate hike action due on March 22. The quantitative tightening cycle in the US is now probably in its last leg with smaller further rate hikes contingent on incoming data.

“However, equity markets typically discount such events well before they actually play out. Hence, as the most aggressive QT cycle in recent times nears its end, we expect equity valuation contraction in general to slow down from hereon, except for areas that are still extremely expensive and growth expectations are sub-optimal,” ICICI Securities said.

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