The next four preferred companies are Infosys, ICICI Bank, Larsen & Toubro and Axis Bank. Of these, Infosys and ICICI Bank have seen a eduction in equity MFs’ exposure, while there was no change for the other two. Fund managers have long been continuing with these companies as their top five holdings.
According to Chandresh Nigam, chief executive officer (CEO) of Axis MF, “We would wait before investing in state-owned banks. These institutions require substantial capital and need to undergo significant structural reforms to be competitive and relevant to customers. We like private sector retail banks which can deliver solid growth with sound asset quality.”
State Bank of India, the only public sector lender that has managed to find a place in fund managers’ top ten list, is at sixth position. IndusInd Bank, another private bank that had recently made an entry in the top 10 recently, has continued to move up. In April, IndusInd pipped Reliance Industries to eight position.
The automobile sector, in particular the four-wheeler space, has gained a bit of traction as fund managers are confident about the sector’s growth. Mahesh Patil, co-chief investment officer (CIO) at Birla Sun Life MF, says, “Earnings growth is looking good for next year for automobiles. It is mainly the car segment and commercial vehicles where we see a volume pick-up and some kind of operating leverage.”
Maruti Suzuki, India's largest car maker, remained consistent at ninth, while Tata Motors became part of the top 10, replacing ITC. No pharmaceutical company made it to the list. Though Sun Pharmaceuticals had briefly made the cut, it could not hold on.
“We are a bit worried in terms of the way we look at some of these pharmaceutical companies. There are some setbacks for a couple of large pharma names (on the back of US Food and Drug Administration’s recent actions). This will probably set them back by a year and a half, but that does not impact the long-term value creation we have seen in some of these names,” adds Patil.