Mutual funds, which diluted their holdings in index heavyweights in favour of mid and small-cap stocks a few months ago, appear to be returning to large cap stocks.
An analysis of the January portfolio (latest available) disclosed by mutual funds shows that more than half of the top 50 stocks were drawn from the large caps. Fund houses may have used the sharp meltdown in indices that began in mid-January to add to their holdings in frontline stocks.
Recently listed Future Capital was accumulated by 115 schemes along with Reliance Petroleum, Tata Chemicals, Thermax, Sintex Industries and Cairn that moved into the top 50 slots. Seven stocks moved out of the top fifty between December and January and a new set moved in. Reliance Industries continues to be at top of the list. Taking the correction in their stride, fund houses added the stock to their portfolio.
Stocks such as BGR Energy, Power Grid Corporation and Bharat Electronics have slipped out of the top 50. While Jindal Steel and Power stepped in, NTPC was acquired by few more funds. Banking sector continued to be sought after; several leading stocks barring State Bank of India and HDFC Bank were accumulated during January. Kotak Mahindra Bank was accumulated by 23 more funds and in total 94 schemes held the stock in January. ICICI Bank, Punjab National Bank and Bank of Baroda were other banks that were accumulated.
IT stocks, reeling under pressure for quite sometime now continues to be viewed with caution. Funds continued to prune the top tier stocks such as Infosys Technologies, TCS and Satyam Computer.
The number of schemes holding Infosys has dropped by 20; but in all 151 schemes continued to repose faith in the stock. Other stocks that slipped out of the top 50 were Mundra Port, Hindustan Unilever, ACC and Century Textiles. In the telecommunication space holdings in Bharti Airtel were pruned and Reliance Communication was added by three more funds