In line with the definition laid down by the Association of Mutual Funds
in India, entities with market cap exceeding Rs 28,000 crore were considered large-caps and those from Rs 8,800-28,000 crore considered mid-caps. Among large-caps, MFs
seemed to be in favour of public sector undertakings (PSU) and privately-owned financial players.
MFs’ stake in general insurance player ICICI Lombard rose 414 basis points (bps) in Q2. In ICICI Bank and Housing Development and Finance Corporation, their stakes rose 177 bps and 125 bps, respectively.
State-owned oil marketing companies Bharat Petroleum and Hindustan Petroleum saw holdings by MFs
rise 243 bps and 195 bps, respectively. Among other PSUs, MFs’ stake rose in Coal India (186 bps) and NTPC (173 bps).
look attractive as valuations are cheap and the possibility of strategic sale offers room for value unlocking.
For instance, MFs’ stake in Crompton Greaves Consumer Electricals rose 230 bps to 18.57 per cent. Further, MFs’ stake in Jubilant Foodworks inched up to 13 per cent, from 11.17 per cent in Q1.
While fund managers
are making select bets in the mid-cap segment, MF investors have seen disappointing returns in mid- and small-caps, of late. Over the past one year, mid-cap schemes have given returns of 6 per cent, whereas frontline market indices have given returns of 13-15 per cent. For small-cap schemes, one-year returns have been under 1 per cent.
Fund managers reckon a broader market rally is on the cards, which could sharply push up returns of mid- and small-cap schemes. “The divergence between the Nifty and mid- and small-cap indices is at historical extremes. Broader markets
tend to outperform for 18-24 months after such extremes are reached,” said Pankaj Tibrewal, fund manager at Kotak Mutual Fund.
On a year-to-date basis, the BSE Midcap is trading 3.5 per cent lower, while the BSE Smallcap is down close to 8 per cent. The benchmark Sensex has risen above 10 per cent during the same period.