The mutual fund industry has lapped up the offer-for-sale of NLC India (formerly Neyveli Lignite Corporation) made by the government last month.
Mutual funds invested ₹648 crore in the OFS and thus, increased their holding in the stock by more than 35 times; it now figures among the top three holdings in small- and mid-cap schemes, according to Morningstar data analysis.
Last month, the government had raised ₹700 crore by selling 5 per cent stake in NLC at the floor price of ₹94 a share. Post-disinvestment, the government’s stake in NLC has come down to 84.32 per cent.
Kaustubh Belapurkar, Director (Research), Morningstar Investment Advisor, said mutual funds used the ₹700-crore offer-for-sale in NLC to add the stock to their portfolios, given limited floating stock in the counter.
Similarly, small- and mid-cap schemes of mutual funds have doubled their holding in Oberoi Realty with ₹230 crore. With investment of ₹726 crore and ₹681 crore respectively, Apollo Tyres and Bharat Financial Inclusion were the top bets of mutual funds in their mid-cap schemes.
They have sold their holdings in Karur Vysya Bank, Birla Corp, Bata India, NIIT Technologies and Rain Industries in October. Max Financial Services, Tata Chemicals, Divi’s Labs and Voltas were their top bets in October.
Continue to bet on telecomDespite the trouble in the telecom sector, large-cap mutual fund schemes have invested ₹808 crore in Bharti Airtel, increasing their holding by 13 per cent, while raising their holding in SBI Life Insurance by 74 per cent with an investment of ₹941 crore.
Belapurkar said managers have been underweight on telecom stocks for some time now. However, he said Reliance Jio raising tariff in October was a positive development for incumbent players, such as Bharti, leading to fund managers adding positions in the counter.
Mutual funds invested ₹1,730 crore, ₹1,446 crore and ₹1,173 crore in Axis Bank, HDFC and HDFC Bank which attracted much of the fund flow in large-cap schemes.
Interestingly, they reduced holdings in Coal India and SBI by 17 per cent and 4 per cent, respectively, selling shares worth ₹502 crore and ₹1,060 crore. They also sold stakes in Infosys, ICICI Bank, Vedanta, BPCL and Hindalco.