Mutual Fund buy in Large cap companies

Which top 10 large cap stocks have been bought by the mutual fund companies in February 2019? What is the current total mutual fund holding in these large cap stocks? Why have been these stocks added? How are these stocks performing? SEBI has done the new categorization of stocks into large cap, mid-cap and small cap. Top 100 stocks as per the market capitalisation are the large cap stocks.

Large Cap Stocks Bought by Mutual Funds in Feb 2019
Which are those top 10 Large Cap Stocks?

Top 10 Large Cap stocks

Let’s study the recent actions of those top 10 large cap stocks in Mutual Funds:

  1. The stock of Axis bank has largely underperformed in the past. The reason was issues relating to the Non-Performing Assets (NPA’s) of the bank, the CEO of the bank, Shikha Sharma, was heavily criticized, and there have been a lot of changes in the management of the bank. After a brief stagnant period, Axis bank has brought its NPA’s under control, new CEO has been appointed and the bank seems to be getting back on track. As a result, the interest of FII’s and DII’s in Axis bank has increased. 15% of the ownership in the bank is of the mutual fund companies, which portrays a nice confidence in the company. Because of the share bought buy the mutual fund companies in February 2019 an upward trend in the share price of Axis bank can be observed.
  2. Kotak Mahindra Bank is one of the most finely managed banks among the private banks in India. Kotak Mahindra bank has no negative aspect to its corporate governance.
  3. Reliance Industries is one of the largest companies in India. The 4% holding as per market cap may look less but it is not. Reliance industries even have good amounts of investments by FII’s and even the general public.
  4. L&T, too, has started to look good again after passing through a brief period of stagnancy. The guiders and results of Q3 2018 have also been very good with strong growths. The interest of institutional investors in this company is on the rose again. Not many know this but, L&T same as HDFC Ltd., has no promoter holding in them. L&T as company is a promoter in other company, but has no promoter to itself, which is a very interest thing about the company.
  5. National Thermal Power Corporation (NTPC) is a Public Sector Undertaking (PSU). NTPC, or for example GAIL or Power grid, are companies which correspond to a fixed deposit kind of investment. There are not much negative performances by these companies and not much government pressure is present on the companies. So, such companies give returns similar to a FD with not much downsides but also not huge upside.
  6. After a very bad quarter last year, the interest of the institutional investors is on the rise again in Yes bank. A lot of changes have taken place in the bank. Rana Kapoor is no longer the CEO of the bank. Ravneet Gill has been appointed as the new CEO of the bank. RBI has also given a clean chit to the bank in the audit conducted by them. But now everything is playing out in the favour of the bank. The share price of Yes bank which had gone down to the levels of Rs. 170 has now gained the levels of Rs. 250. The stock has gone down owing to the issues of bad corporate governance.
  7. Indian Tobacco Company (ITC) is trying rigorously for a breakthrough in a business other than their tobacco business. (Reliance too was for a long time looking for a breakthrough which it got with Reliance Retail and Jio. Reliance Industries share price experienced a rally in the last 2 years, before that for the last 7-8 year too was stagnant.) So, ITC is going that very phase right now. ITC is still looking for bigger breakthroughs on the hotel business or their penetration in the FMCG industry increases, but no luck yet.
  8. A lot of fund houses and their fund mangers had built a positive attitude towards the pharma industry. But the results they expected from the pharma companies were not achieved. The truth is, pharma industry is still going through difficult times and will continue to go for some more time. The pharma industry may soon become a cyclical one as there is a lot of competition. The changes in the US FDA practices have had the largest impact on the Indian pharmaceutical companies. Thus, Divi’s Lab, or any other pharma company for that matter, can prove to be uncertain investments.
  9. GAIL is also a Public Sector Undertaking (PSU) and like explained above is a FD kind off investment.
  10. Motherson Sumi is an auto-ancillary company. Motherson Sumi looks a very strong company in the auto supporting section. All the big players in the automobile industry are the clients of this company.

summary

  1. These were the top 10 favourite investments made by the mutual fund companies in February 2019.
  2. Corporate governance of a company should be looked at very closely and be given high importance while choosing a company to invest in.
  3. Companies which have high Foreign Institutional Investors (FII’s) holding can also be taken under radar for investments.

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.

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