Which mid-cap stocks did domestic mutual funds buy in Q3?

Indian stock market indices have fallen around 6-8% from the record highs touched in October last year amid concerns of monetary tightening and an impending war situation in Ukraine.

Foreign portfolio investors (FPIs), or foreign institutional investors (FIIs), have been the driver of local bourses historically, but mutual funds (MFs) have also become significant in the last few years given the rush of local liquidity. In fact, the bull run over the past couple of years is largely attributed to the flow of cash into domestic mutual funds, who have in turn pumped in money into the stock market.

While most local fund managers have been voicing concerns about the state of valuations, quarterly shareholding data shows they pushed up their holding in hundreds of listed companies.

Of these, 78 companies were mid-cap firms with market valuation of Rs 5,000-20,000 crore. This compares with 67 mid-cap firms that saw MFs push up their holding in the quarter ended September 30.

Interestingly, FIIs upped their stake in 36 mid-caps in the October-December period as against 57 stocks in the quarter ended September. This shows that, while FIIs were less bullish on mid-caps, MFs bulked up on such firms.

Moreover, MFs bought additional stake in fewer large caps last quarter but were attracted to more mid-caps, showing their stance.

Mutual fund managers were bullish on financial services firms, drugmakers, real estate and infra companies among others.

Top mid-caps that MFs bought

If we look at the pack of mid-caps with market cap between Rs 5,000 crore and Rs 20,000 crore, then MFs pushed up their stake in Vinati Organics, Navin Fluorine, Indian Bank, Prestige Estates, Phoenix Mills, Ajanta Pharma, Gujarat State Petronet, Sheela Foam, KPIT Technologies, IndiaMART and Timken India.

Among others, GR Infraprojects, Aditya Birla Sun Life, IIFL Wealth Management, Nuvoco Vistas, Alembic Pharma, Bajaj Electricals, Motilal Oswal, Glenmark Pharma and Redington also saw MF buying activity.

Lower down the order are names like JB Chemicals, Asahi India Glass, KEC International, Amber Enterprises, CreditAccess Grameen, HFCL, Krishna Institute and Manappuram Finance where MFs bought additional stake.

Sleepwell mattress maker Sheela Foam and Amber Enterprises were stocks where both MFs and offshore portfolio investors put additional money last quarter.

Meanwhile, mid-caps where MFs were buying stake in the last two quarters running include names like Indian Bank, Prestige Estates, GR Infraprojects, Phoenix Mills, Gujarat State Petronet, Manappuram Finance, Sheela Foam, Timken India, JB Chemicals, KEC International and Bajaj Electricals.

If we take a peek at mid-caps where mutual funds picked up 2% or more additional stake last quarter we get a list of just six stocks, half of the number in the three months ended September 30.

This pack has names like Kalpataru Power, Zensar, Delta Corp, Glenmark Pharma, MCX and MTAR Technologies.

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