Mutual funds were big sellers in financial stocks in January this year, reveals data shared by mutual fund research & ratings agency Morningstar with FE. Financial stocks including ICICI Bank, Housing Development Finance Corporation (HDFC), IndusInd Bank, HDFC Standard Life Insurance and Axis Bank were among the top stocks on the sell list. Mutual funds sold a total of Rs 1,074 crore worth of ICICI Bank shares in January, while they offloaded Rs 758 crore, Rs 650 crore, Rs 515 crore and Rs 270 crore worth of HDFC, IndusInd Bank, HDFC Standard Life Insurance Company and Axis Bank shares. Interestingly, the selling in financial stocks in January was restricted mostly to private sector entities. There has been a lot of expectation on PSU banks participating in corporate loan recovery.
“Now those PSU banks will not really pan out the way it was thought after Punjab National Bank (PNB) unveiled that it detected some fraudulent transactions of $1.7 billion. There would obviously be selling in PSU space. We expect the private sector banks to benefit ahead,” said Aditya Makharia, vice president, Research at Motilal Oswal Asset Management Company. Apart from financial stocks, mutual funds sold steel stocks, including JSW Steel and Tata Steel, perhaps on higher leverage concerns as both companies look to aggressively bid for assets in the insolvency process. Other prominent stocks on the selling list include L&T, HCL and UPL.
Among the most bought large-cap stocks, telecommunication services provider Bharti Airtel, emerged at the top. Bharti Airtel announced that it is initiating non-binding exploratory discussions to evaluate the possibility of listing its Africa operations, which are a part of Bharti Airtel International (Netherlands), in an internationally recognised stock exchange. “While the listing is still uncertain and might be some time away, we believe this makes strategic sense for Bharti Airtel. Separate listing of Airtel Africa could provide visibility on its valuation and could also help Airtel deleverage its balance sheet,” said BNP Paribas in a report.
ITC was the second-most bought stock, followed by Infosys, Zee Entertainment, Power Grid Corporation of India, Eicher Motors and State Bank of India. After Vishal Sikka’s resignation in August 2017, Infosys stock hit a 52-week low of Rs 861. However, the stock has bounced back and has gained 12.5% since then. “Even in a weak quarter and after a lot of head winds, the new management of Infosys has maintained its stable run by maintaining its margins. We expect Infosys to perform well in the coming quarter under the new management and have assigned a PE of 16.5x to its FY19E EPS of Rs 75 and have arrived at fair value of Rs 1,238 per share,” said an analyst on condition of anonymity. Apart from Infosys, other stocks include National Thermal Power Corporation (NTPC), National Mineral Development Corporation (NMDC) and Sun Pharmaceuticals.