Data available for January showed fund managers at SBI Mutual Fund bought 5.37 crore shares of Steel Authority of India (SAIL) and 2.12 crore of NHPC amid talks of possible rerating for the PSU stocks.
The fund house also bought 20- 96 lakh shares of Indian Oil, Kirloskar Oil, ICICI Bank, HDFC Bank, Axis Bank, Torrent Power, Ahluwalia Contracts, Infosys, NTPC and Bank of Baroda during the month.
Government-owned companies have found favour with domestic money managers in January, as analysts thought there could be case for some of them to earn a re-rating this year. Moreover, the government is also putting pressure on the PSUs to reward shareholders, which has lured investors.
The fund house is trying to make the most of the polarisation in the market, as it believes things may change with the improvement in the macroeconomic situation.
“Market capitalization stays polarised towards largecaps versus mid and smallcaps now. Similarly, relative underperformance of value versus quality is at multi-decade highs. Emerging market equities have been massive underperformers versus developed world peers, especially the US, over the past decade,” the fund house said in its monthly outlook.
“These polarizations should reverse if a successful reflation does materialise. This, in turn, could mean greater opportunity for alpha creation, and being bottom-up should be more rewarding versus staying focused on aggregates,” it said.
The market has rallied sharply post Budget, as the government unveiled its capex plans. Some of SBI Mutual Fund’s top buys have been beneficiaries of these announcements, proving their calls right.
These purchases happened at the time when equity funds as a whole witnessed sizable outflows, partly because of profit taking by domestic institutional investors.
The top stocks that SBI fund managers sold in January was
, which saw a massive spike in bad loans in December quarter earnings. The fund house offloaded 37 lakh shares of the lender on top of a 1.65 crore share sale in December.
The fund house also dumped 15-35 lakh shares of Adani Ports, City Union Bank, Burger King, Sequent Scientific, Tata Motors, Cholamandalam Investment & Finance, GAIL, SBI, ITC and Hindalco.
Some of the buying and selling could have happened due to changes in portfolios of passive funds in line with the changes in the composition of the equity benchmarks they track.
SBI Mutual Fund also took fresh positions in Apollo Tyres, Equitas Holdings, Indigo Paints and Wendt (India) but exited Amara Raja Batteries, Navneet Education and Route Mobile.
