Mutual funds scaled down their exposure in more than half of the BSE-500 companies in the quarter ended March on a sequential basis. The index comprises largecap as well as midcap stocks.
Data compiled by the Business Standard Research Bureau shows of the 385 companies which had announced their latest shareholding, fund houses cut their stake in about 200.
The companies where MFs pared stake include Kingfisher Airlines, HCC, Voltas, Hindalco, Patni Computers, Axis Bank, Larsen & Toubro, Tata Motors and Mahindra & Mahindra, among others.
| MAJOR STAKE-REDUCTION TARGETS (In Q4 FY11) | |
| Company | Change (%)* |
| Kingfisher Airlines | -3.83 |
| HCC | -2.85 |
| Voltas | -2.35 |
| Siemens | -2.31 |
| Jubilant Foodworks | -1.89 |
| Videocon | -1.25 |
| Pantaloon Retail | -1.15 |
| Patni Computers | -1.18 |
| TVS Motors | -1.05 |
| Hindalco | -0.84 |
| Cipla | -0.67 |
| Tata Motors | -0.33 |
| L&T | -0.30 |
Fund managers say the quarter was marked with dividend payouts and had seen churning and stock picking within sectors. For instance, fund houses brought down stake in automobile companies Tata Motors and TVS Motors, but increased the exposure in other sectoral companies such as Maruti Suzuki and Bajaj Auto. This also held true in banks & financials, information technology and metals.
Gopal Agrawal, equity head at Mirae Assets, says, “On an aggregate basis, the reduction (of stake) is very low. The quarter saw redemption as well as Initial Public Offerings, for which MFs generated cash.”
Jimmy Patel, chief executive officer at Quantum Mutual Fund, agrees.
“Several fund houses declared dividends. Moreover, there was profit booking amid redemption pressure,” he adds. For 2010-11, domestic funds saw a net outflow of Rs 49,406 crore, compared with a net inflow of Rs 83,081 crore. The equity category witnessed a historically high outflow of Rs 13,405 crore, while income funds saw an outgo of Rs 36,706 crore in 2010-11. Diversified equity funds have reduced exposure to mid-cap stocks over recent months, explains Dhruva Chatterji, research analyst at MF tracker Morningstar India.
By Morningstar’s statistics, the average percentage of capital allocation for diversified equity funds in mid-cap stocks slipped to 20.5 per cent in March against 21.27 per cent in December. In the case of small caps, the exposure reduced to 14.15 per cent, compared with 14.82 per cent. During the quarter, MFs increased their stakes in 145 of the BSE-500 companies, which included Zuari Industries, Cox & Kings, YES Bank, HPCL, BPCL, Tata Steel, Infosys and Bajaj Auto.
