MFs sense major market shakeup; steer clear of trendy stocks, sectors

NEW DELHI: Domestic mutual funds dumped shares of FMCG and metals & mining companies in May rally and turned selective in stock picking as the equity indices hit record highs.

FMCG stocks such as , , were on their 'sell' book. The institutional class also cut exposure to metal & mining stocks such as Tata Steel and Hindustan Zinc after a strong rally, data showed.

On the other hand, these funds turned choosy in stock picking, and PNB, and Hero MotoCorp were among the names they were seen buying.

“The month saw notable changes in the sectoral and stock allocation of funds. The weightages of PSU banks, oil & gas, auto, capital goods, insurance and private bank stocks increased, while those of healthcare, metals, consumer, technology, telecom, chemicals, consumer durables, and cement moderated,” Motilal Oswal Securities said.

Inflows into equity funds improved to Rs 10,083 crore in May from Rs 3,400 crore in April. SIP flows also came in stronger at Rs 8,800 crore compared with Rs 8,600 crore in April. The BSE Sensex rose 6.5 per cent to settle the month at an all-time high of 15,583.

Among largecap funds, MF holding in PNB stood at Rs 1,018 crore at May end compared with Rs 445 crore in April. In SBI Life, their exposure rose to Rs 8,201 crore from Rs 5,572 crore. Indus Tower, Hero MotoCorp, Bajaj Holdings and Adani Enterprises were among other largecap stocks where these funds hiked exposure to in May, ICICIdirect said in a note.

As per Motilal Oswal Securities, PSU banks’ weightage in total MF industry AUM reached a 15-month high of 3.4 per cent. The sector – which was at the 13th position a year ago – climbed to the ninth place in mutual funds' pecking order.

Oil & gas sector’s weightag3 increased for the second consecutive month to 7.1 per cent, up 10 basis points month-on-month. The sector now ranks fifth in the allocation of mutual funds – it was in the third position a year ago.

Metals’ weightage – after reaching a 29-month high in April – moderated to 3 per cent, down 20 bps MoM.

Stocks that topped MFs' sell list included Hindustan Zinc, where they now hold Rs 165 crore worth of shares against Rs 194 crore in May. In Tata Steel, their exposure fell to Rs 14,864 crore from Rs 15,290 crore.

FMCG stock Britannia Industries saw MF exposure fall to Rs 3,131 crore from Rs 3,585. In Colgate and Godrej Consumer, their exposure in value terms increased but fell in terms of the number of shares held. InterGlobe Aviation, Wipro, , Lupin M&M were among other stocks where MFs cut exposure in May.