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HDFC Asset Management, India’s largest money manager by assets, was busy buying select banks, PSU and infrastructure stocks all through August, even as BSE Sensex slid marginally by 0.40 per cent.
The fund house increased exposure to YES Bank, ITC, NHPC, Coal India and SBI; stocks that have plunged between 7 per cent and 65 per cent since January 2019.
It added 1.59 crore shares of Bharat Electronics whose share price has rallied nearly 25 per cent so far this calendar.
BSE benchmark Sensex is up just 2.46 per cent year to date.
“Indian equities are offering good value,” Prashant Jain, ED - CIO of HDFC Asset Management, told ETNow.
“When largecaps start offering good value, you are unlikely to get it wrong, because these are big businesses with low leverage.
Corporate leverage in India has come down,” he said.
Ace Mutual Fund database showed HDFC AMC held 6.02 crore shares of YES Bank as of August 31 against 2.57 crore a month earlier, hinting that the fund house sees value in the private sector lender.
“Most of the businesses, which were in deep pain have either been sold or are in a state where they do not really matter.
They are doing reasonably well and things are okay,” he said.
The fund house bought 71.50 lakh additional shares in oil-to-telecom behemoth Reliance Industries.
Analysts have turned upbeat on the prospects of RIL stock after its telecom arm Reliance Jio this past week rolled out its broadband offering JioFiber across 1,600 cities.
“This is disruptive.
The consumers targeted use data in a big way,” said Deven Choksey, Group Managing Director at KR Choksey Investment Managers.
He expects the stock to double in three years.
HDFC AMC also added shares of banking majors ICICI Bank (30 lakh shares), Axis Bank (21.67 lakh) and HDFC Bank (17.51 lakh) besides doing a fair bit of buying on the counters of DCB Bank (16.61 lakh), RBL Bank (7.50 lakh) and Federal Bank (7.59 lakh).
Saravana Kumar, CIO, Essel Mutual Fund, says retail-focused private lenders with strong balance sheets should do well going forward.
“These banks will also corner some market shares from NBFCs and PSUs,” he said.
Jain’s team at HDFC Mutual Fund also bought over 10 lakh shares each in Avenue Supermarts, Tata Steel, Delta Corp, BPCL, Bajaj Electricals and Indian Hotels.
Inox Fluorochemicals, Pidilite Industries, Piramal Enterprises, SRF and Sterling and Wilson were among the fund house’s fresh buys, while it completely exited Havells India and Shree Cement.
Overall, the fund house increased stakes in as many as 122 companies and offloaded shares of 33 across sectors.
It held 314 stocks as of August 31, 2019.
Among the stocks in which the fund house offloaded between 1 lakh to 2.50 crore shares during the month were BHEL, SAIL, Reliance Nippon Life Asset, NIIT Technologies, Tata Chemicals, Shriram Transport Finance, Just Dial, Bharti Airtel, Ambuja Cement, Elecon Engineering, Zee Entertainment, Rites, Wonderla Holidays, Solar Industries, S Chand and IndiaMART InterMESH.
It also sold more than 1 lakh shares of auto majors including Tata Motors, Maruti Suzuki and Hero MotoCorp.
India this August recorded the steepest drop in auto sales ever since the Society of Indian Automobile Manufacturers (SIAM) had started collating monthly wholesale vehicle sales data in 1997-98.
Jain of HDFC Asset Management said he sold auto stocks mainly due to valuations.
“The prices have come down, but multiples have not come down because earnings will also de-grow sharply.
First investment has to revive, salaries have to go up and only then can we make a case for a sustained revival in consumer discretionary,” he said.
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