Mutual funds offload heavyweight counters

TCS, Reliance, State Bank of India and Maruti Suzuki were among most-sold stocks last month

Index heavyweights are among the most sold counters by equity mutual fund (MF) managers in recent times. Amid a sharp correction in key indices, fund managers are okay with trimming their exposure in some big names. A mix of profit booking and directional investment strategy is why.

Four heavyweight stocks - Tata Consultancy Services (TCS), Reliance Industries (RIL), State Bank of India (SBI) and Maruti Suzuki -- were among the top five most-sold companies in April, according to a report from Edelweiss.

TCS, the country's leading software giant, continues to face the brunt of fund managers, who squared off nearly 1.23 million shares worth Rs 304 crore of the company to bring holdings to 15.96 million. In March, too, a little over a million shares of TCS were liquidated by fund managers.

"TCS posted disappointing results for both the March quarter and financial year 2014-15. We believe the sector in general might see more pain," said the chief investment officer of a mid-sized fund house. The company, compared to the preceding quarter, has for the first time in recent memory recorded a fall in revenue growth, from almost 30 per cent to just over 15 per cent.

According to Ambareesh Baliga, an independent market expert, “The current year for information technology will be a tough one. There are concerns on the sector for a while and even companies have flagged such concerns, including TCS.”

RIL is the second, with fund managers selling 2.67 million shares worth Rs 230 crore. SBI, the country's largest lender, saw 5.26 mn shares worth Rs 141.8 crore being offloaded.

"SBI, from a long-term perspective, is a must-have stock in anybody's portfolio. However, the lender is still struggling with restructuring of assets and this might continue in FY16 as well. Dips in the stock will be buying opportunities and current selling is only partial profit booking and not a directional investment call," explains the CIO of a large fund house which has been bullish on banks. SBI is one of the most owned among fund managers; they hold about 394 mn shares of the bank.

Maruti Suzuki needs special mention. A little over a year before, several top fund managers were against the company's Gujarat unit expansion under the parent firm, Japan's Suzuki Motor. However, the counter later made an entry in the top-10 most owned companies, while the share price doubled from Rs 1,800 to Rs 3,600.

Yet, last month, Maruti was one of the most sold counters, though less than others, as fund managers sold 260,000 shares worth Rs 98 crore. "This could be a pure profit booking exercise by some fund houses. We continue to believe the company will add more value to investors, though intermittent hiccups might not be avoided," said the equity head of a fund house which has been bullish on the passenger car segment. Among other stocks offloaded were YES Bank, Idea Cellular, Titan, Oil India, NTPC, Steel Authority of India, Wockhardt and GAIL India.