Falling prices get MFs to pick up Tata stocks
Mutual funds have been buying stocks of Tata Group companies during their fall as the internal battle within the group and impacts of demonetisation has made some of the stocks worth buying at the prevailing market price.
In the month of November 2016, fund houses added substantial positions in key Tata Group companies, an analysis done by Morningstar said. Domestic mutual fund’s holdings have gone up between September 30, 2016 to November 30, 2016 in TCS by 2.45 per cent, in Tata Motors by 11.33 per cent, in Tata Motors DVRs by 3.29 per cent, in Tata Power by 8.36 per cent and in Tata Steel by 8.17 per cent.
“Mutual Funds continued to buy into Tata Motors, with fresh allocation of 1.38 crore shares. Given the robust product pipeline for JLR and good demand for the Tiago which witnessed month-on-month growth resulted in building investors’ confidence. The recent announcement to hike the prices of their cars across segment will also enhance their profitability going forward. Tata Motors DVR which has consistently been seeing selling by Mutual Funds through the year also witnessed buying activity by Mutual Funds, albeit in smaller quantities,” Morningstar said.
“ Tata Power which has witnessed heavy buying by Mutual Funds through the year; saw a continuation of buying in November. Power generation and distribution stocks edged higher during the month aided by a strong show from Power Grid Corporation of India,” Morningstar analyst said.
“Mutual funds had pruned exposure to TCS in the month of October but turned out to be net buyers in November. The stock witnessed positive tailwind as signs of improvement in US economy led to increase in stock price of IT companies. The remarkable improvement visible in US financials helped building confidence in Indian IT revenue growth which resulted in increasing the allocation in the stock,”analyst from Morningstar said.
“We continue to see buying activity in Tata Steel in November. The stock has been witnessing buying by mutual funds since June, with many funds initiating exposure to the stock as managers turned positive on the sector hoping that the worst is behind us,” Morningstar said.
Ravi Ranjan Prasad