I think last month was slightly muted. I would not say that in the months prior, we have seen a fair bit of action though last month there was some buying but nothing dramatic. In fact, what we have seen on the banking side last month was quite a fair bit of flows into Axis Bank and SBI — the two large banking names that have pure and the most bought stocks. . But ICICI has been sort of creeping up and is definitely one of the more widely held stocks among managers.
If Reliance is one of the top MF buys in the month gone by, why is that not reflecting into the stock price?
Because while mutual fund managers are buying, there is also some selling from foreign institutions.
One would believe that there is a fair amount of optimism on the Street with regards to Rel Jio. Their latest numbers were quite reassuring.
Absolutely, but in October we have seen that Reliance was one of those counters where there was a fair amount of FII selling.
People are still buying InfosysNSE -0.85 %, SBI. I am interested in Coal India. Is this got to do with the adjustment for their offer for sale?
That is correct. It was more of a broad-based buying and not just one odd mutual fund. It was seven-eight large fund housing buying on the stock.
What is happening with IT? Is money moving out of IT? Has the sector reached its peak performance?
Actually it is a contrary. We have seen a fair bit of flows. But the one thing that has happened is it is again getting concentrated flowing into the largecap names. We have seen Infy, TCS, Tech M and HCL Tech getting money. WiproNSE 0.94 % is constantly seeing outflows and that has been largely the play. Midcap IT names have taken a breather, probably with the exception of Hexaware.
Among midcaps, Bharat Financial seems to have traction but Indian Hotels is also among the top five. Is it a building bet ahead of the holiday season?
That is not only a recent trend, we have been seeing it through the year. In Indian Hotels, people have been adding positions. It is hard to find hotel rooms at most times and definitely that is one sector that managers were betting on. We had Lemon Tree with an IPO earlier on, which people were subscribing to. Definitely, there is activity and interest around the hotel sector.
Some of the midcaps and smallcaps sold by MFs include the financing businesses but I also see a Divi’s Lab, CESC, DHFL, NALCO and MphasisNSE 0.64 %. Financing. Is the jury still out or are people coming back?
People are still maintaining status quo on the NBFC side. We have not seen too much of selling but at the same time people do not want to get in there as well. 2018 was a classic case in point where managers did not really go whole hog into buying NBFCs due to valuations and other reasons. Clearly, they have at least been protected in the sense that proportionally they were more into corporate banks and retail banks and that has helped them. This as a trend is going to continue for some time at least.
What about Yes Bank? Are you seeing serious outflows?
I would not say there are serious outflows because to start with the quantum of money that was invested on Yes Bank by funds was quite limited. But yes, last month, we saw two large fund houses completely pare positions on that stock. Given the uncertainty on that counter, they probably wanted to get out.
How are people approaching the oil and gas space? A lot of mutual funds sold off ONGC. Is oil prices coming off the reason?
That is one of the reasons. Also it is slightly stock specific because CPSE the ETF sold a fair bit of ONGC. It is largely driven by that one counter selling but if you look at the energy side, BPCL, HPCL, IOC and all the OMCs have gotten a fair bit of money in October.
What is happening in autos and auto ancillaries? Also, what is happening in two- wheelers?
Interestingly, we are seeing a drive towards auto manufacturers rather than the ancillaries. Because of festive season, people expected sales to be good in Maruti, M&M, Tata Motors or even Hero MotoCorp and TVS motors. There have been some flows in most of these counters.
Is there a clear exit from some of these auto ancillaries?
There is no exit but rather there have been muted data around that.
What is the trend in terms of flows? Are the flows picking up? October was a very strong month.
Absolutely. That trend continues. October saw almost Rs 13,000 crore coming in. There were a couple of new fund offerings and some lump sum money also came in. So, the flows have been steady. We had seen managers actually sell in September because they wanted to create cash. They used that cash in the correction in October. Almost Rs 26,000 crore has been pumped into the equity markets by mutual fund managers in October.