Mutual fund managers since April last year have sold around 3.6 million shares, worth nearly Rs 30 billion, of India’s largest car manufacturer Maruti Suzuki. They plan to continue to prune its holdings as valuations appear stretched after the last year’s stellar rally.
In 2017, shares of Maruti Suzuki jumped 83 per cent, even as the benchmark Sensex gained 28 per cent.
“There is nothing wrong with the company. The recent selling (of Maruti Suzuki's shares) should not be seen in this light. It's a market leader in automobiles and is even today among the top holdings in portfolios. But, the problem is stretched valuations. I doubt it will sustain in case liquidity dries out,” said a top chief investment officer (CIO).
The rising discomfort among fund managers with Maruti could also be figured out from the outright sale witnessed during December. First time in several years, fund managers liquidated over a million shares of the car-maker in a single month as stock price inched towards the Rs 10,000-mark.
When Business Standard asked, if is it becoming a directional call, fund managers denied. “One can't do away with Maruti Suzuki. It's merely profit-taking and nothing more. We will come back if the counter gives us opportunities, which I think it will,” said the fund manager.
The selling is not restricted to just one or two fund houses, but it is largely across the board. At December end, the exposure which equity segment of mutual funds had in Maruti Suzuki stood at Rs 125 billion against Rs 79 billion a year ago.