Which large cap stocks are mutual funds buying?

Indian stock indices are consolidating near their peak levels and have seen a rush of money towards large cap counters as investors, anticipating a correction, are looking at a comfort factor rather than make riskier bets.

While foreign portfolio investors (FPIs) or foreign institutional investors (FIIs) have been the driver of local bourses historically, domestic mutual funds have become very significant in the last few years given the rush of local liquidity. So much so that the current bull run is largely attributed to the flow of cash into domestic mutual funds, which have pumped in a massive amount of money into the stock market.

Although most local fund managers have been voicing concerns about valuations, quarterly shareholding data shows they pushed up their holding in over 200 listed companies. Of those, they increased their stake by two percentage points or more in around 18% of the companies.

In particular, they hiked stake in as many as 129 companies (as against 89 companies for FIIs) that have a valuation of $1 billion or more last quarter. Of these 129 companies, 74—or more than half—were large cap companies.

Mutual fund managers were bullish on top private-sector banks, FMCG companies, automobile and auto component makers, engineering, select financial services counters, and the Adani group pack, among others.

This is in contrast to FIIs, who were bullish on selective FMCG stocks, PSU banks besides gas and power companies, pharmaceutical and engineering companies, life insurers and a few automakers.

Top large caps that saw MF buying

If we look at the pack of large caps with a market valuation of Rs 20,000 crore ($2.6 billion) or more, then MFs pushed up their stake in HDFC Bank, ICICI Bank, HDFC, Bajaj Finance, HCL Technologies, ITC, Bajaj Finserv, Larsen & Toubro, Axis Bank, ONGC, Adani Enterprises, Tata Motors and Adani Ports.

HDFC Life Insurance, Power Grid, Pidilite, SBI Life Insurance, M&M, Bajaj Auto, SBI Cards, Godrej Consumer, InterGlobe Aviation, Britannia and Apollo Hospitals also saw domestic mutual funds pick up additional shares.

Further lower down the order, Mindtree, Ambuja Cements, IndusInd Bank, Motherson Sumi, Marico, United Spirits, GAIL, Piramal Enterprises, UPL, Bajaj Holdings, Hero MotoCorp and Jubilant Foodworks also saw buying activity by local fund managers.

Some large caps which saw buying from both foreign and domestic fund managers include HDFC Life Insurance, Marico, GAIL, Piramal Enterprises, Canara Bank, Varun Beverages and Dalmia Bharat.

Meanwhile, mutual funds picked up 2% or more additional stake last quarter in around ten large caps. This pack includes Clean Science & Tech, Coforge, Indraprastha Gas, Ashok Leyland, Bata, SBI Life Insurance, Godrej Consumer, Minda Industries, Escorts and Sona BLW.

Clean Science & Tech had also seen significant stake purchase by FIIs.