Domestic mutual funds seem to have taken a bearish stance in the stock market during the last quarter when they offloaded shares worth Rs 9,000 crore (about $1.65 billion) despite a significant uptrend in the overall market and impressive buying by foreign investors.
Individually, sectors like energy, software and pharma were among the worst hit in terms of net sale by mutual funds, while net purchases were made in stocks from metal and mining] and financial segments.
According to global research report by BofA-Merrill Lynch, domestic mutual funds (MF) sold shares worth Rs 9,000 crore (about USD 1.65 billion) during the October-December quarter] 2012, while they acquired shares to the tune of Rs 3,455 crore] (about USD 633 million) during the same period.
The top stocks sold by domestic MFs were -- Wipro, HDFC Bank; energy firms--Reliance Industries (RIL), ONGC and NTPC --,while most bought shares were state-run NMDC, State Bank of India (SBI),ICICI Bank, diversified conglomerate Aditya Birla Nuvo and auto component maker Motherson Sumi Systems.Individually, domestic MFs lowered their exposure to companies like Wipro with sale of shares with an estimated USD 162 million, followed by HDFC Bank (USD 149 million), RIL] (USD 143 million), ONGC (USD 114 million) and NTPC (USD 97 million), the report said.
Additionally, domestic mutual funds sold stake in IT major HCL, pharma companies--Divis Laboratories, Sun Pharma, Cipla and Ipca; utility firms--Power Grid and GAIL; consumer goods maker--ITC and Hindustan Unilever Ltd, and Coal India.On the other hand, domestic MFs major investment during the quarter included NMDC (USD 336 million), SBI (USD 92 million), ICICI Bank (USD 65 million) and USD 53 million each in Aditya Birla Nuvo and Motherson Sumi.According to the report domestic mutual funds continued to be net sellers for the past two quarters. "MF sold Indian equities with an net outflow of USD 1 billion in October-December quarter as compared a net outflow] of USD 1.1 billion in the previous quarter (July-September," it added.
As per the report, industrial was one of the biggest overweight sector for domestic MF's, while they are underweight on areas like financial, software, metals and mining, utilities and energy.
Interestingly, FIIs infused a net amount of over Rs 45,000 crore in the entire Indian stock market in October-December period on the back of a slew of reforms initiated by the government, pushing the broader market Sensex to surge 18,099 points or nearly 10 per cent. In terms of sectors, the domestic MFs sold shares valued at USD 348 million in the energy sector followed by software portfolio (USD 280 million), pharma (USD 264 million), utilities (USD 249 million) and consumer (USD 195 million).
In contrast, mutual funds investment in the metal and mining stood at USD 283 million.