Mutual funds bought over Rs 46,000 crore HDFC Bank shares in H1CY24

Mutual funds bought HDFC Bank shares worth over Rs 46,100 crore in the first six months of 2024, reversing the sell-off trend in the last three months of 2023, according to data from Nuvama Alternative & Quantitative Research.

The investment is the aggregate of total net deployment by active equity, passive and equity-oriented hybrid schemes. The buying led to a surge in mutual funds ownership in the lending sector heavyweight. The mutual funds' stake surged from 19.5 per cent in December 2023 to 24.8 per cent in June 2024. At the same time, foreign portfolio investment (FPI) holding declined from 52.3 per cent to 47.2 per cent.

The stock plummeted over 14 per cent in January following its third-quarter results. The freefall was led by record selling by FPIs. It further declined 4 per cent in February before staging a recovery. Between March and June-end, the stock gained nearly 20 per cent to Rs 1,83.80.

According to experts, the mutual fund (MF) buying in HDFC Bank was elevated due to valuation comfort and a surge in inflows into passive funds. Among passive funds, most of the inflows go into schemes tracking the Nifty and Sensex, of which HDFC Bank is a major constituent.

However, the stock has come under pressure again this month after the announcement of first-quarter results for the current financial year. Global brokerage firm BofA downgraded the stock to 'neutral' from 'buy' after the result.

Apart from HDFC Bank, the stocks that saw the highest MF buying include Indus Towers, Mphasis, Vedanta, Infosys, and TCS. The total investments in the two IT majors stood at Rs 4,870 crore.

The buying came ahead of a likely turnaround in the performance of IT companies. IT stocks went up sharply on Friday after TCS' Q1 results managed to beat the estimates. TCS rose 6.7 per cent, while Infosys went up 3.25 per cent.

On the other hand, the most sold stocks list was dominated by public sector companies. Bharat Electronics, Power Finance Corporation, Hindustan Aeronautics, and State Bank of India were among the most sold stocks by mutual funds in June. MFs also trimmed their exposure to ICICI Bank, Hindalco Industries, and Zee Entertainment.

In the smallcap space, the highest buying was seen in ZF Commercial Vehicle, Gland Pharma, Craftsman Automation, Indraprastha Gas, Aster DM health and Kalpataru Projects. The net investment in ZF Commercial Vehicle stood at Rs 1,530 crore, according to the report.