Mutual funds sought smallcap treasures in a sea of red as mkt takes a dip

Snap up Aster, Aavas during correction

Mutual funds (MFs) scooped up smallcap shares across sectors such as healthcare, banking and financial services in March 2024 amid a near 4.5 per cent fall in key smallcap indices.

Aster DM Healthcare, NLC India, and Aavas Financiers topped the list of most-bought stocks in the Rs 10,000 crore to Rs 40,000 crore market capitalisation (mcap) bracket, according to a study by Nuvama Alternative & Quantitative Research.

Aster and Aavas had corrected by 13 per cent and 10 per cent in March, respectively, while NLC India ended the month with a 2.5 per cent gain. MFs deployed around Rs 3,700 crore into these three stocks.

Smallcap fund disclosures show that some schemes utilised the cash to snap up shares after corrections. The cash levels for 13 schemes that have released additional details stood at 5.5 per cent at the end of March compared to 5.9 per cent in February.

They also reduced their holdings in some stocks. Hindustan Copper, Bata India, and UPL (formerly United Phosphorus) topped the list of the most-sold smallcap stocks. The total selling of these stocks amounted to Rs 1,000 crore worth of Hindustan Copper, Bata India, and UPL.

According to the report, Karnataka Bank, Metropolis Healthcare, and Wockhardt were the top buys in the below-Rs 10,000 crore mcap segment.

In the overall universe, ITC led the buy list with Rs 7,670 crore in MF investments. It was followed by Tata Consultancy Services and HDFC Bank as MFs allocated over Rs 10,000 crore to the two stocks.

Bajaj Finance, State Bank of India, and ICICI Bank topped the list of most-sold stocks.