Mutual funds sold these mid-cap stocks during Jan-March. Did you offload any?

The Indian stock market has been in the grip of the bears for the past few weeks as the surprising monetary tightening move by the Indian central bank along with the US Federal Reserve’s rate hike and the continuing spectre of inflation fuelled by price of crude has affected investor sentiments. Even though there has been some buying this week, the market is yet to take a decisive direction.

The benchmark indices are now around 10% lower than the recently tested all-time peak. 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.

Foreign portfolio investors (FPIs), or foreign institutional investors (FIIs), have been the driver of local bourses historically, but mutual funds have become more significant in the last few years given the rush of local liquidity. So much so that the bull run of the last two years 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 88 companies (as against 90 companies in the previous quarter ended December 31) that have a valuation of $1 billion or more last quarter. FIIs had sold stake in as many as 92 companies that have a valuation of $1 billion or more last quarter.

Of these 88 companies, 47 (against 51 in the previous quarter) were large-cap companies that saw MFs cut their holding last quarter.

MFs also cut stake in 65 mid-caps or stocks with market value in the Rs 5,000-20,000 crore bracket. This was much higher than 58 mid-cap companies where MFs cut their holding in the preceding quarter and even more compared to 46 such stocks where they sold shares in the quarter ended September 30.

This means MFs are turning more bearish towards mid-caps compared to larger companies.

Top mid-caps that saw MF selling

If we look at the pack of top mid-caps, then MFs pushed down their stake in Poonawalla Fincorp, Grindwell Norton, Pfizer, Bank of India, Clean Science & Tech, Aavas Financiers, Rajesh Exports, BHEL, Dr. Lal Pathlabs, Gillette India, Alkyl Amines, SKF India and Mangalore Refinery.

Among the companies with market value upwards of Rs 10,000 crore, MFs sold shares of DCM Shriram, ZF Commercial, Ajanta Pharma, Happiest Minds, Apollo Tyres, Hitachi Energy, KIOCL, Glenmark, NLC India, PVR, Capri Global Capital, Shriram City Union, Castrol India, BASF India, Krishna Institute of Medical Sciences and BSE.

Further down the order, local fund managers sold shares of Blue Star, Finolex, Easy Trip Planners, Amara Raja Batteries, Amber Enterprises, ITI, Firstsource Solution, Akzo Nobel India, Jindal Stainless, Anupam Rasayan, Birla Corporation and Polyplex Corporation.

Bank of India, Alkyl Amines, Hitachi Energy and Happiest Minds were the mid-cap counters that had witnessed MFs pare their holding in the preceding quarter as well.

Meanwhile, mid-caps where MFs cut stake the most included NLC India and Triveni Engineering, where they snipped their stake by 0.5 percentage points.

Pfizer, Mangalore Refinery, Glenmark, PVR, Finolex, Birla Corporation, Mahindra CIE, C.E. Info Systems, Granules India and Triveni Turbine saw local fund managers cut their stake by 0.4 percentage points.