MFs trim blue-chip stocks, cash reserves to capitalise on block deals

Domestic mutual funds (MFs) strategically reduced holdings in blue-chip stocks and cash reserves to make significant investments in companies involved in large block deals in June.

 

Fund managers acquired shares worth ₹10,500 crore in Asian Paints, with SBI MF and ICICI Prudential MF leading the purchase of a nearly 5 per cent stake sold by Reliance Industries. MFs also invested ₹8,200 crore in Vishal Mega Mart, where Kedaara Capital sold a 19.6 per cent for ₹10,223 crore.

 

They also invested ₹4,900 crore in Bajaj Finserv, where promoter entities divested 1.8 per cent stake sale for ₹5,506 crore.

 

According to Nuvama Alternative & Quantitative Research, MFs offloaded approximately ₹1,500 crore each in liquid blue-chip stocks like ICICI Bank, Reliance Industries, Infosys, and HDFC Bank.

 

Experts suggest these sales, coupled with a reduction in cash holdings from ₹1.96 trillion in May to ₹1.81 trillion in June, provided the liquidity for block deal participation.

 

MFs injected nearly ₹46,000 crore into domestic equities in June.

 

In the mid-cap segment, Sai Life Sciences, Mahindra & Mahindra Financial Services, and RBL Bank attracted significant buying, while Mahindra Lifespace Developers, Oswal Pumps, and Sharda Motor Industries led interest in the small-cap space.

 

On the other hand, Indraprastha Gas, Affle 3I and Bandhan Bank were the most-sold stocks in the mid-cap space, while Orient Cement, CarTrade Tech and Cigniti Technologies were the most-sold small-cap names.