Team Prashant Jain at HDFC AMC picked most IPOs in Sept; dumped RIL, ICICI Bank, ITC

At the time when the equity market was consolidating in September, HDFC Asset Management was busy picking some of the initial public offerings (IPO) besides reshuffling some of its holdings in telecom, auto, banking, logistics, auto, pharma and PSU spaces.

BSE Sensex declined 1.45 per cent during the month, while the BSE Midcap Index gained 0.30 per cent and BSE Smallcap Index 3.70 per cent.

Data available with Ace Mutual Fund showed the country’s second-biggest fund house by assets invested heavily in the recently concluded IPOs of Chemcon Specialty, Computer Age Management Services (CAMS), Angel Broking and UTI AMC.

CAMS and Chemcon made stellar debuts on the bourses with listing gains of 24 per cent and 115 per cent, respectively. UTI AMC and Angel Broking both listed at discounts of over 10 per cent.

In the secondary market, the fund manager bought over 10 lakh shares each in Bharti Airtel, Hindalco, Jindal Steel, Transport Corporation of India (TCI), Tata Motors, HDFC Bank, Sun Pharma and Bharat Dynamics. Barring TCI (up 10 per cent), other stocks declined 3-21 per cent during the month.

“The current market has interesting opportunities to generate alpha,” HDFC AMC’s Chief Investment Officer Prashant Jain said in a recent interview. He specifically pointed to the metal companies, which he said are offering very good value even if one were to assume mid-cycle earnings. Jain said the market is deeply polarised and consumer names have become very expensive.

He, however, advised investors not to read much into monthly buy-sale data of fund houses. Over the past fortnight, there were rumours about Jain’s having quit HDFC AMC, something the CIO and the fund house both denied.

Overall, HDFC Mutual Fund increased exposure to at least 63 firms (including the IPOs), while cut it in 111 others. Some of these buying or selling may have been done for HDFC MF’s passively-managed index funds.

Among other major purchases, the AMC’s investment team raised stakes in M&M, Petronet LNG, Tata Consumer Products, ACC, Firstsource Solutions, Hindustan Aeronautics, Bharat Electronics, Rain Industries, Apollo Tyres, HDFC, Symphony, Lupin and HCL Technologies, among others, by buying 1-8 lakh shares during the month.

Aditya Birla Sun Life AMC, India’s fourth-largest mutual fund house by assets, has also turned bullish on sectors like pharmaceuticals, auto, IT and cement.

“We are positive on pharma due to steady earnings visibility. The auto sector is also coming out of the downturn. We may see a recovery in two-wheeler and four-wheeler space due to the need for personal mobility. Low ticket consumption also looks good to us and the cement sector is a better way to play infra push,” Mahesh Patil, CIO (equity), Aditya Birla Sun Life AMC, told ETMarkets.com in an interaction.

Patil is also positive on IT considering the steady order flows and growth visibility. “Coming out of the Covid crisis, there will be increased focus on digitisation and clouds migration. Indian companies are pretty much position to capture that up move,” he said.

HDFC MF reduced some of its exposure in FMCG major ITC, energy-to-telecom major RIL, power transmission firm Power Grid Corporation of India and private lender ICICI Bank. The fund house also sold shares in Tata Steel, Bharti Infratel, NTPC, Union Bank of India, Bank of Baroda, CG Power, SBI Cards and Punjab National Bank, among others.

In the broader market, the fund completely exited stocks like Ashok Leyland, Hexaware Technologies, HSIL, Jyoti Structures, Kajaria Ceramics, L&T Finance, Manappuram Finance, Pokarna and Torrent Power.

Its fresh buys during the month included Quess Corp, Nalco, Endurance Technologies, DLF, Dabur India and Bharat Forge, among others.