Mutual funds are betting on sectors that have received strong returns in the last 1 year. In the second half of FY 2021, pharma, chemicals and IT stocks performed strongly during the lockdown. In the third quarter, investors turned to the financial and auto sectors, resulting in a strong rally in these sectors.
Mutual funds have been an equity market net seller till now in FY 2021. However, he has been increasing his stake to 78 shares every quarter of the current financial year. MFs have so far sold 1.25 lakh crores during this year. However, the market has shown a gain of 70 percent, setting a new record high. The fund house has taken advantage of this rally for profit booking. During the same period FIIs have made purchases of Rs 2.78 lakh crore in Indian markets.
Results of better companies than expected, improving economic data, steps being taken by the government for reforms and soft monetary policies of the Reserve Bank have given a fillip to the market setbacks. The market giants are not very concerned with the growing cases of COVID-19. The market is confident of the increasing pace of vaccination and the government’s ability to control the epidemic.
If you look at the data for every quarter of the financial year 2020-21, there are 78 stocks in which mutual funds have bought strongly. Of these, 35 stocks are such that from April 1, 2020 till now, there has been a growth of 100%.
These stocks include Tata Communications, KPIT Technologies, Tata Elxsi, Firstsource Solutions, Birlasoft, Graphite India, Indian Metals and Ferro Alloys, Jindal Steel and Power, Persistent Systems, Sarda Energy and Minerals and Just Dial from 200 to 200 in the quarter to June 2020. There has been an increase of 400 percent.
Shares such as Phillips Carbon Black, Indian Energy Exchange, Mahindra Lifespace Developers, Century Plyboards (India), Nocil, GHCL, Mphasis, Minda Industries, Endurance Technologies, Supreme Industries, Gujarat Gas, HCL Technologies, Can Fin Homes and Piramal Enterprises in this period It has seen a jump of 100 to 199 percent.
There are 26 stocks in which more than 50 per cent returns have been seen during this period. These include Radico Khaitan, V-Mart Retail, Greenlam Industries, Brigade Enterprises, Bharat Dynamics, BASF India, Lux Industries, Lupin, Page Industries, Maruti Suzuki, REC, ICRA, Bosch, Jyothy Labs, Sunteck Realty and Fortis Healthcare.
A look at these figures shows that most of these stocks are related to IT or ITES, pharmaceuticals, fertilizers, auto and steel industries.
Looking at the 1-year returns, it is found that 144 per cent in Nifty Metal Index, 114 per cent in Nifty Auto Index, 104 per cent in Nifty IT Index and 65 per cent in Nifty Pharma Index.
Most of these stocks are related to mid and smallcap. Market giants say that pharma stocks can still remain in Limelight for a long time. Apart from this, automation, digitalisation and healthcare healthcare have gained a lot of support due to Covid-19 and these stocks will remain on fast track even further.
Apart from this, there will be benefit of rising commodity prices and recovery in demand in steel stocks. The government’s focus on agriculture will lead to an increase in fertilizer stocks. In the same country, the government policy of emphasizing on infrastructural development will see an increase in auto stocks besides infra.
Gaurav Garg of CapitalVia Global Research says that if the world’s large economies focus on renewable energy technology and the pharma sector, then investment of mutual funds on these sectors will be seen to be increasing.
There are indications that investment managers are turning their backs on Sikkil Industries and focusing on better growth sectors. But investors are advised to research thoroughly before taking any investment decision and get advice from a certified investment advice car.
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