Fund managers were picky last month

Mutual fund managers were big buyers in November when stocks fell like ninepins after demonetisation and Donald Trump’s surprise victory in the US presidential election. However, they have been selective in stock picking, shows the data.

They used the correction in prices to buy certain stocks but didn't hesitate to also sell shares. Banking stocks were in demand, particularly State Bank of India (SBI), Bank of Baroda (BoB) and Punjab National Bank, al government-owned. From the private lending space, ICICI Bank was a strong buy.

“In the aftermath of the note ban, all major public lenders were hit hard. We were aggressive on buying BoB and SBI. The call went well, too, as before the month ended, these stocks climbed much higher than our recent acquisition costs,” said the equity head of a bank-sponsored fund house.

Mutual funds, fund managers

In the automobile space, four-wheeler and two-wheeler makers were bought. Maruti Suzuki, in particular, attracted fund managers as it slipped below Rs 5,000 and further. Tata Motors and Mahindra & Mahindra were among the others. The two-wheeler space, long overlooked by fund managers, also turned out to be a buying opportunity. Bajaj Auto and TVS Motor were the major picks.

“Demonetisation is having a temporary impact on consumption but stocks saw substantial corrections, over-reaction in our view. Both Maruti and Tata Motors fell to compelling levels. The monsoon was good and inflation is likely to remain below five per cent. This will augur well for automobile companies. The sharp corrections were opportunities one could not afford to miss,” said a chief investment officer (CIO).

Equity fund managers, however, cut their exposure in cement. They feel the sector is likely to face several headwinds — demand continues to be poor, pricing power has been weakened. “In fact, we were sellers in cement since mid-monsoon,” adds the CIO cited earlier.

Fund managers in November put a net Rs 13,700 crore into stocks.