Here are the mid-cap stocks that mutual funds have been selling

The Indian stock market has entered a highly volatile territory after a sharp slide during the last few trading sessions just weeks after testing previous peak in January. High crude oil prices due to the Russia-Ukraine war and its likely impact on Indian economy, coupled with impending rate hikes, has spooked investors.

The benchmark indices, however, bounce back on Tuesday to close with gains. Stocks also jumped on Wednesday and started Thursday with an upside. While many market pundits are seeing a bottom for the slide in prices, few do consider this as a ‘dead cat bounce’ that may give a false comfort level for investors to pump in cash.

Indeed, the early trends from the results of the state elections gives comfort to investors about the hold of the BJP-led central government, but the war in Europe would continue to be a risk factor as it could lead to a sharp run-up in oil prices and have a damaging impact on the manufacturing sector as well as inflation.

Foreign portfolio investors (FPIs) or foreign institutional investors (FIIs) have been net sellers in Indian equities for the past few months, but mutual funds have become significant buyers given the rush of local liquidity. The current bull run is largely attributed to the flow of cash into the domestic mutual funds, who have in turn pumped in money into the stock market.

Most local fund managers have been voicing concerns about the state of valuations, and quarterly shareholding data shows they cut stake in several companies.

In particular, they cut stake in 90 companies (as against 81 companies in the previous quarter ended September 30) that have a valuation of $1 billion or more last quarter. In contrast, they had hiked stake in as many as 108 companies commanding a valuation of $1 billion or more.

If we filter the list by mid-cap stocks with firms having a value between Rs 5,000 crore and 20,000 crore, 58 mid-cap companies saw MFs cut their holding last quarter. This was much more than 46 mid-caps where they sold shares in the quarter ended September 30.

Top mid-caps with MF sell calls

The pack of mid-caps where MFs pushed down their stake includes ICICI Securities, Fortis Healthcare, Bank of India, Federal Bank, New India Assurance, Nippon Life India, Sun TV Network, Ramco Cements and Sundram Fasteners.

Among others with market value upwards of Rs 10,000 crore, Mahindra & Mahindra Financial, JK Cement, Chambal Fertilisers, Endurance Technologies, AIA Engineering, Alkyl Amines, Hitachi Energy, Happiest Minds and CDSL also saw MFs snip their stake.

Further down the order, local fund managers sold shares of Century Plyboards, WABCO India, Birlasoft, Exide Industries, Radico Khaitan, SJVN, Laxmi Organic, Castrol India, TTK Prestige and UTI Asset Management.

Alkyl Amines, CDSL, Exide Industries and SJVN were also among the mid-cap counters that witnessed MFs pare holding in the preceding quarter.

Meanwhile, mid-caps where MFs cut stake the most included BSE, Mastek, Polyplex Corporation, ICICI Securities, Sun TV, Chambal Fertilisers, Hitachi Energy, Birlasoft, Exide Industries, Gujarat Narmada Valley, NLC India and SIS. In all these companies, local fund managers cut their stake by 0.4%.

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