The Hindu Business Line : Select stocks turn active thanks to mid-cap funds

Kolkata April 27 Mid-cap funds are stirring up the market, courtesy deals that are being worked out across sectors. A number of fund houses, including a few heavyweights, have been busy lately, locating opportunities in the mid-cap segment.

Among the better known companies into which funds have bought in recent days are Birla Corporation and Eicher Motors. These have seen action by ICICI Prudential MF and Reliance MF respectively; in each case, the shareholding has reached a critical mark.

The mid-cap space has been quite agog, mutual fund circles point out, while referring to the arrival of a number of mid-cap products. Collectively, the resources at their disposal is not small, it is felt. The most recent entrants include small- and mid-cap funds by JM and DSP Merrill Lynch.

In the Birla Corp case, ICICI Prudential MF - along with Prudential Asset Management (Singapore) Ltd - has picked up shares from the secondary market afresh. After the acquisition, it holds 5.14 per cent of the company, a notice posted by NSE has mentioned.

As for Eicher Motors, Reliance MF has (through Reliance Tax and Reliance Regular Savings Fund) has acquired new shares, a move that has pushed its holding to 7.9 per cent in the company.

More deals in offing

MF sources say that there will be more such deals in the future, given fund managers' abiding interest in mid-cap stocks. "This space will remain in the news.

Obviously, in their effort to spot the right opportunities, funds will keep on trying hard", Mr Pankaj Razdan, ICICI Prudential MF, observed.

A number of funds currently make up this segment, some of them quite large in size.

In many cases, diversified funds that do not carry `mid-cap' tags are also seriously invested in these stocks. In recent times, quite a few close-end funds have been launched, aimed at partial but critical exposure to mid-caps.

The newly introduced Birla Long Term Advantage Fund - Series 1, for instance, is likely to invest in mid- and small-cap counters.

This is a three-year fund, which is expected to provide the fund manager a certain flexibility to develop a core portfolio.

HSBC Global turns active

HSBC Global Investment Funds is on the go, having brought about deals in companies such as Aditya Birla Nuvo and CESC. The critical dates are between April 17 and April 24, NSE has stated.

With regard to CESC, the group's holding is now 4.47 per cent. It is 5.21 per cent in the case of Aditya Birla Nuvo, courtesy an open market purchase.

In India, HSBC MF runs a mid-cap equity fund, which has given about 36 per cent return since launch (as at the end of the last quarter).

The last three months, however, it has provided a negative return of 8 per cent. It had over 300 crore under management in February.