10 Most Favourite Large Cap Stocks of Mutual Funds

Top 10 Large Cap Stocks

Introduction

In this article, we are going to see the 10 Most Favourite Large Cap Stocks of Mutual Funds. Maximum numbers of mutual fund schemes have invested in them. An online poll
was conducted for choosing a stock in which the maximum numbers of mutual fund schemes have invested in them. Here, we are not talking about the amount invested in those large cap stocks but the number of mutual fund schemes, invested in them.

The options to choose from were HDFC Bank, ICICI Bank, Infosys, Reliance Industries, Axis Bank and such. Maximum people choose HDFC bank, as the stock in which maximum number of stocks would have invested in it. This would have been current if it were February 2018 right now, but its not. The statistics has changed completely in February 2019. The interesting that came out from the poll was, the large cap stocks which got the least votes was in fact the stock in which maximum mutual fund schemes have invested.

We listed of 10 Large Cap stocks which are held by maximum number of mutual fund schemes. Out of these 10, 5 stocks belonged to the banking sector. And out of this 5, 4 are private sector banks and just one is a PSU. And 1 company each from IT, infrastructure, auto, FMCG and diversified sectors (many business areas of 1 company).

10 Most Favourite Large Cap Stocks

1. ICICI Bank

• ICICI Bank Limited is an Indian multinational banking and financial services company headquartered in Mumbai, Maharashtra. As of 2018, ICICI Bank is the second largest bank in India in terms of assets and market capitalisation. ICICI bank has a corporate lending oriented business.
• This was would be a surprising stock for many people. 10 schemes have additionally added this stock to their portfolio.

2. HDFC Bank

• An Indian banking and financial services company, HDFC Bank Limited has its headquarter in Mumbai, Maharashtra. HDFC Bank is India’s largest private sector lender by assets. It focuses more on retail banking.
• There has been a fall in the number mutual fund schemes which have invested in this stock (YoY). The reason is the mutual funds are increasing allocations to corporate banks and HDFC is a retail bank.

3. SBI

• The State Bank of India is an Indian multinational, public Sector banking and financial services statutory body. It is a government corporation statutory body having headquarter in Mumbai, Maharashtra.
• This another corporate banks whose balance sheet now looks stable and the NPA’s are under control.

4. Axis Bank

• Axis Bank is the third-largest of the private-sector banks in India offering a comprehensive suite of financial products. The bank has its head office in Mumbai, Maharashtra.
• Axis bank too is a corporate bank. Axis bank has gone through some major transformation. Mr. Amitabh Chaudhary, former CEO of HDFC Life, has taken the charge as the CEO of Axis bank from 1^st January 2019. He, as the new CEO, has made a lot of changes in the functioning and performance of the bank. This has been taken very positively by the DII’s and FII’s. The stocks of Axis bank have had a rally of almost 40% in the last 1 year. The reason is the same that the management has changed and a new perspective has been developed in Axis Bank.
• The rise in the numbers of mutual fund schemes invested is the highest in Axis bank.

5. Infosys

• Infosys Limited is an Indian multinational corporation that provides business consulting, information technology and outsourcing services. It has its headquarters in Bengaluru, Karnataka, India.
• Last year was very good for the IT companies because of the rupee depreciation, their revenues in terms of rupee had been improved healthily. Last year there weren’t also any issues related to US economy.

6. ITC

• ITC is an Indian cigarette company which is headquartered in Kolkata. Its five diversified businesses are Fast-Moving Consumer Goods, Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business and Information Technology.
• ITC is a super liquid stock, and which is why mutual funds might have invested in it, as if and when they face liquidity or redemption pressure, they can immediately sell this stock.

7. L&T

• Larsen & Toubro Limited, commonly known as L&T, is one of the largest Indian multi-national firms and leading construction company in India headquartered in Mumbai, Maharashtra, India.
• The results of L&T, of last 12 months, are very good. They have performed in both YoY as well as QoQ basis.
• There are also news of L&T acquiring Mind Tree where they have already bought some stake in Mind Tree and have now given an open offer. There have been many developments in that hostile takeover attempted of Mind Tree by L&T.
• But the increased investments are because of their core infrastructure business. L&T has a very strong project pipeline.

8. Kotak Mahindra Bank

• Kotak Mahindra Bank is an Indian private sector bank headquartered in Mumbai, Maharashtra, India. In February 2003, Reserve Bank of India issued the licence to Kotak Mahindra Finance Ltd., the group’s flagship company, to carry on banking business.
• Kotak Mahindra is another retail oriented bank, like HDFC bank. It is a very well managed bank.
• There are no problems with NPA’s of the bank The only bank with the bank is the notice given by RBI to the bank to reduce the promoter holding.

9. Reliance Industries

• An Indian conglomerate holding company, Reliance Industries Limited has headquarter in Mumbai, Maharashtra, India. Reliance Industries is the largest company in India as per market capitalization.
• Reliance industries has a very diversified business portfolio. It owns businesses across India engaged in energy, petrochemicals, textiles, natural resources, retail, and telecommunications. The company has very rich cash flow.

10. Maruti Suzuki

• Maruti Suzuki India Limited, formerly known as Maruti Udyog Limited, is an automobile manufacturer in India. It is a 56.21% owned subsidiary of the Japanese car and motorcycle manufacturer Suzuki Motor Corporation. Currently  it has a market share of around 51% of the Indian passenger car market.
• Here, the number of mutual fund schemes have gone down. There is no problem with their business model. The reason behind this can be the slowdown in the auto industry. The last 4 years have been very good for the auto companies, but the next 6-8 quarters can continue to be sluggish.

summary

1. Markets are expecting that the corporate banks are going to perform well this year, and that is why they have gotten higher allocation than the retail oriented banks.
2. This year some issues can be seen building in the US economy. There are rumours of USA going for a recession. The 10-year G-sec yields have gone down from 3.18% to 2.48%. the US economy may not grow as per the expectations as there are signs of a slowdown. Thus, there are chances that the IT companies may not have a similar or better year again.
3. Almost all of the above can looked at as a long term investment option.

Notes: –

• The numbers that are used are approximate and have been rounded for presentation purposes.
• We are not in any way saying that these are bad companies, or the stocks of these companies are bad.
• We are also not suggesting anyone to immediately go and buy these stocks or invest in the stock markets.
• Only an analysis has been presented here. No judgments or final statements are being made here.