After a flat 2016, bulls clearly dominated D-Street in 2017 as benchmark indices rallied
nearly 25 percent in the year. The biggest contributor to the rally were retail investors as
more household savings got channelized into equity markets via mutual funds (MFs).
Small and midcap stocks rallied, thanks to record inflows from mutual fund throughout the
year 2017. As many as 28 stocks in which fund managers raised stake throughout 2017 more
than doubled investors’ wealth which includes names like HEG, Yuken Ltd, V2 Retail, Dilip
Buildcon, Minda Industries, SpiceJet, JM Financial, NOCIL, Ramkrishna Forging, Tata
Metaliks, Jindal Steel etc. among others.
Majority of stocks mentioned in the list belong to the small and midcap space. It looks like
mutual fund managers are testing new waters as some of the investment made are for the
very first time in the year 2017.
Fund managers raised stake from 0.04 percent to 1.6 percent in HEG which has already
given a return of over 1000 percent so far in the year 2017.
Similarly, Fund managers raised stake in Dilip Buildcon from 2.92 percent in the March
quarter to 5.04 percent recorded in the September quarter.
“A large part of this growth in the midcap and smallcap is because of the liquidity that we
have witnessed in India -- domestic liquidity which we think is a structural trend. It is not
something that it will vanish,” Sanjeev Zarbade, Vice-president – PCG Research at Kotak
Securities told Moneycontrol.
“We have just around three-four percent of our retail assets in mutual funds and equity. It is
almost 15-20 percent for the developed markets. Provided these midcaps and smallcaps don’t
mess in terms of going for badly priced acquisitions or taking some steps which are not in the
right spirit of the corporate governance, they should be able to do well over the next four-five
years,” he said.
Note: The above list for reference purpose. Moneycontrol.com advises users to check with
certified experts before taking any investment decisions.
Indian markets rallied in one straight line without giving investors any big opportunity to
enter. The market bounced back swiftly after 3-4 percent correction; hence, plenty of money
is still standing on the sidelines ready to get invested.
If there is a big correction in the market, it will be quickly bought into especially by the
institution which are sitting on a big cash pile.
Retail investors have pumped in Rs 1.26 lakh crore into mutual funds in the month of
November, driving industry assets under management to an all-time high of Rs 21.8 lakh
crore.
With the latest inflow, total infusion in MF schemes reached Rs 3.8 lakh crore in the first
eight months (April- November) of the current fiscal, latest data with Association of Mutual
Funds in India (Amfi) showed.
Equity and equity-linked schemes attracted over Rs. 20,300 crore. In addition, more than Rs
7,600 crore was invested in balanced funds. Further, over Rs 9,300 crore was put in the debt
funds. In contrast, gold ETFs continued to see a net outflow of Rs 89 crore.
If we look at the trend for equity schemes, MFs have poured in more than Rs 30,000 crore in
the December quarter, according to data collated from Capitaline.
The amount of money going into equity schemes more than doubled in the last three years.
Fund managers were pouring a little over Rs 14,000 crore in the December quarter, back in
the year 2014 which has now reached well above Rs 30,000 crore in the year 2017.
Fund managers have already poured in a little over Rs 31,000 crore so far in the December
quarter of 2017.
“Inflows into domestic Mutual Funds continue to remain strong since mid-2014. Domestic
flows have contributed significantly to equity investments while foreign investments, on the
other hand, remained volatile. Increasing return on equity in the US may shift the flow of
funds,” BofAML said in a report.
“Primary issuance in India too has been strong in 1HFY18. Further, equity issuance to the
tune of USD 5 billion is expected in the near future. The supply of money will create demand
and help in growing infrastructure,” it said.
Stocks in which MF have a double-digit stake:
Many small and midcap stocks in which fund managers have a double-digit stake have
managed to outperform Nifty50 returns so far in the year 2017. As many as 30 out of 83
stocks have given negative return while the rest managed to outperform Nifty.
Some of the stocks in which fund managers have double-digit stake include names like
Equitas Holdings, Max Financial, KNR Construction, Federal Bank, India Terrain, Repco
Home Finance, HSIL, Atul, Tata Chemicals, BEML, PNC Infratech, and CG Power etc.
among others.
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