Mutual funds offload shares worth $1.2 billion in Jul-Sept

Tags: Mutual Funds
Domestic mutual funds (MFs) seem to have taken a bearish stance in the stock market during the last quarter, when they offloaded shares worth about $1.2 billion (Rs 6,625 crore) despite a significant uptrend in the overall market and impressive buying by foreign investors.

Individually, sectors like financials and consumer were among the worst hit in terms of net sale by MFs, while net purchases were made in stocks from industrial and consumer staple segments.

According to global research report by BofA-Merrill Lynch, domestic MFs has emerged as net sellers during the July-September quarter, with an outflow of $1.19 billion, compared with a net inflow of $50 million in the previous quarter (April-June).

The top stocks sold by domestic mutual funds are ICICI Bank, Tata Consultancy Services (TCS), Power Finance, Reliance Industries (RIL) and ONGC, while most bought shares are Cairn India, Tech Mahindra, Petronet LNG, Canara Bank and HDFC Bank.

Individually, domestic MFs lowered its exposure to companies like ICICI Bank with sale of shares with an estimated $190 million, $100 million each in RIL and ONGC, $60 million in ITC, $50 million in Jindal Steel, $40 million each in BPCL, BHEL, HUL and Tata Steel.

On the other hand, domestic MFs major investment during the quarter included Cairn India ($240 million), Canara Bank ($40 million) and HDFC ($30 million).

The report said industrial and consumers staples are one of the biggest overweight sector for domestic MFs, while they are underweight on areas like financials, software, metals and mining utilities and energy.

Cement saw an increase in its underweight due to inclusion of Ultratech in Nifty resulting an increase in sector weightage in the index. Underweight in metals and mining reduced due to exclusion of Sail from Nifty index, thereby reducing the sector weightage in the index, the report said.

Interestingly, foreign institutional investors (FIIs) infused a net amount of about Rs 40,000 crore in the entire Indian stock market in the July-September period on the back of a slew of reforms initiated by the government, pushing the broader market Sensex to surge over 1,300 points, or more than 7 per cent.

In terms of sectors, domestic MFs sold shares valued at $231 million in the consumer sector, followed by finance portfolio ($224 million), metal and mining ($182 million), auto ($140 million), telecom ($118 million) and software ($92 million), the report said.

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