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    Betting on laggards! Team Naren dumps RIL, insurers to look beyond big names

    Synopsis

    The biggest bets of the ICICI Pru investment team, led by market veteran S Naren, during the month were in power, oil and gas, shipping, textiles, banking and PSU stocks.

    S-Naren
    The fund house sold 5 lakh shares in RIL, the stock leading the market from the front. The stock gained further 13 per cent in July.
    India’s third largest fund manager ICICI Prudential Mutual Fund turned focus on the underperforming sectors and stocks in July, as investors broadly chased momentum and piled on to the few big names leading the charge.

    The fund house cut stake in life insurance players, energy-to-telecom major Reliance Industries and private sector lender HDFC Bank.

    The biggest bets of the ICICI Pru investment team, led by market veteran S Naren, during the month were in power, oil and gas, shipping, textiles, banking and PSU stocks.

    Data available on Ace Mutual Fund database showed the fund house lapped up over 50 lakh additional shares in power utilities NTPC and SJVN. Shares of the former declined 9.23 per cent during the month, while those of the latter advanced 1.15 per cent. NSE benchmark Nifty gained 7.50 per cent for the month.

    The two stocks have been laggards, rising just 7 per cent since the beginning of FY21 against 30 per cent gains in the benchmark Sensex.

    Among top buys, the money manager picked up over 10 lakh additional shares each in Arvind Fashions, NHPC, IndianOil, ICICI Bank, City Union Bank, The South Indian Bank, The Great Eastern Shipping Company and Coal India.

    Arvind Fashions declined 27 per cent in July, while NHPC gained 1.75 per cent, IOC 3.75 per cent and GE Shipping 6 per cent. South Indian Bank, ICICI Bank and City Union Bank declined up to 13 per cent. These stocks have risen between -9 per cent and 28 per cent so far in FY21.

    The fund house also betted on two auto ancillary players, Motherson Sumi System (MSSL) and Tata Steel. Motherson reported Rs 1,192 crore loss for June quarter, and Tata Steel over Rs 4,600 crore. Shares of the former gained 0.12 per cent in July and that of the latter 12 per cent.

    Motilal Oswal has a ‘Buy’ call on MSSL with a price target of Rs 135. The brokerage said the auto component major is one of its preferred bets on a global auto sector recovery.

    ICICI Securities is positive on Tata Steel with a price target of Rs 413. “With reviving domestic prices, improved mix, resilient iron ore prices and sanguine balance sheet management can help Tata meaningfully outperform peers,” the brokerage said.

    “There are plenty of attractive investment opportunities are available outside Sensex and Nifty,” says G Chokkalingam, Founder, Equinomics Research and Advisory. “Airlines, sugar and mid-sized MNC look lucrative to me,” he said.

    The fund house sold 5 lakh shares in RIL, the stock leading the market from the front. The stock gained further 13 per cent in July. It also offloaded shares of HDFC Life, SBI Life and ICICI Prudential Life – some of the early gainers of the post-lockdown rally. HDFC Life gained 14 per cent in July, SBI Life 13 per cent and ICICI Pru Life 6 per cent. HDFC Bank, another stock the fund house sold, declined 3.10 per cent during the month.

    Two other counters where the fund house sold over 1 crore shares each during the month included M&M Financial and Tata Power. It also offloaded shares in Asian Paints, Bharat Electronics, ITC, Sun Pharma and Biocon.

    Sunil Subramaniam, MD & CEO, Sundaram Mutual, is advising investors to add midcap and smallcaps in the equity portfolio. “I would recommend an asset allocation of 50-30-20 in large, midcap and smallcap space from a three-years perspective,” he said.

    “Double-digit returns are definitely on the table. Largecaps will continue to be the leader for the next 18 months as the economic recovery at ground level is not strong. At present, liquidity is driving up the market,” he said.

    ICIC Prudential Mutual Fund’s other major buys in July included Rain Industries (7.89 lakh shares), Brigade Enterprises (7.87 lakh), JSW Steel (7.71 lakh), REC (6.31 lakh), HPCL (5.85 lakh), Hexaware (5.75 lakh), Tata Chemicals (5.45 lakh) and Adani Ports (4.95 lakh), among others. It also freshly bought into Aditya Birla Fashion and Retai, Mastek, Prince Pipes and Rossari Biotech, the latest IPO.

    In all, the fund house increased stakes in at least 114 stocks during the month, reduced it on some 400 counters.



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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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