Top largecaps & midcaps that HDFC AMC lapped up during March selloff

Five largecap and midcap stocks that saw huge battering in the March selloff found a big institutional investor waiting to lap them up; HDFC Asset Management.

India’s second largest fund house, which commands immense clout on Dalal Street thanks to its hugely experienced fund management team led by industry veteran Prashant Jain, bought over 1 crore shares each in State Bank of India, Bharat Electronics, SpiceJet, ITC, NHPC, NTPC, Power Grid, Coal India, as these stocks got pummeled to prices last since a decade back.

Barring Bharat Electronics (which rose 0.50 per cent), rest of the stocks declined up to 56 per cent in March.

BSE benchmark Sensex crashed 23 per cent during the month.

Data available with Ace Mutual Fund showed the fund house did a lot of shopping on select aviation, telecom, banking, FMCG, cement, PSUs and metal & mining counters during the month.

HDFC AMC was the country’s largest mutual fund house by assets till last quarter, when SBI Mutual Fund pipped it to the top slot, Amfi data showed.

The fund house also reduced exposure to some popular largecap stocks just ahead of the Q4 earnings season. They included IT majors Infosys (36 lakh shares), Tata Consultancy Services (9.51 lakh shares) and banking major HDFC Bank (29.29 lakh).

Brokerage Dolat Capital said global macros deteriorated significantly over last two months and created a significant amount of uncertainty over financial prospects for domestic IT firms.

HDFC AMC also sold over 10 lakh shares each pharma majors Cipla and Sun Pharmaceutical during the month. Pharma stocks have since started bouncing, as investors betted on a spike in demand in a more health-conscious scenario.

HDFC Mutual Fund’s other major buys in March included Punjab National Bank, Reliance Industries, ICICI Bank, REC, Bank of Baroda, Union Bank of India, Canara Bank, Ambuja Cement, NLC India, HPCL, GAIL and BPCL, among others. The fund house added 42-95 lakh additional shares of these companies during the month.

It also added shares of select metal, auto and telecom players, including JSW Steel (31 lakh shares) Vedanta (25 lakh shares), Mishra Dhatu Nigam (2.55 lakh shares), Maruti Suzuki (0.48 lakh shares), Tata Motors (17 lakh shares) and Bharti Airtel (18 lakh shares).

“The impact of Covid-19 will be mixed for the telecom sector. Telecom operators like Airtel are likely to witness some challenges in subscriber addition and Arpu growth, given the lockdown and extension of validity. Higher data usage is likely to offset Arpu challenges. Players like Bharti Infratel will have minimal impact and earnings estimates are likely to remain stable,” ICICIdirect said.

Elsewhere, the fund house bought into Housing Develpoment Finance Corporation (38 lakh shares), Apollo Tyres (31 lakh shares), Delta Corp (22 lakh shares), Oil & Natural Gas Corporation (20 lakh shares), Larsen & Toubro (20 lakh shares) and Power Finance Corporation (19 lakh shares).

In a recent interaction with ETNow, Prashant Jain, ED and CIO, HDFC Mutual Fund, expressed optimism about his outlook for the market, saying markets usually return to sanity after such big falls and the macro environment looks conducive with lower interest rates and a sharp drop in crude oil prices.

Jain said stock valuations have been reasonable for some time, but expensive stocks have kept getting costlier. “This crisis is a good time to invest in the Indian market,” Jain said.

Meanwhile, the fund house sold over 1 lakh shares each in Trent, Asian Paints, DCB Bank, Colgate-Palmolive, DLF, Balkrishna Industries, Aurobindo Pharma, Cochin Shipyard, Tech Mahindra, Solar Industries and LIC Housing Finance during the month.



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