Large mutual funds bought shares of lenders, automobile makers, and select IT companies in May as they stuck to beaten-down stocks amid uncertainty over the near-term market outlook, Economic Times reported.
In May, the Nifty declined 3%, partly led by sell-offs in IT stocks that are on average down 20-25% from their highs.
The Nifty IT index dropped 6 per cent in May. The main reason behind the fall was that FPIs sold stocks worth over ₹16,000 crore from the sector amid a volatile rupee, according to data released by NSDL.
Foreign investors have been bearish on Indian markets for a multitude of reasons, including inflation and a weakening rupee.
Meanwhile, the US market accounts for 40-78 per cent of Indian IT firms' revenues, with the big five – Tata Consultancy Services, Infosys, Wipro, HCL Technologies, and Tech Mahindra – accounting for more than half.
|Top AMC's Fund Movement in May||Buy|
|Nippon India||Bajaj Finance|
|Kotak||Whirlpool of India|
|Tata Asset Management||Infosys|
|Source: Economic Times|
Almost 6 stocks in the Nifty IT pack are trading 30-40% down from their 52-week highs.
Some fund managers used the lower price levels to buy stocks such as Infosys, TCS, and Tech Mahindra.
Fund managers also bought underperforming auto stocks like Maruti, Eicher Motors, and Mahindra & Mahindra, where growth has been muted due to chip shortages and demand revival has been relatively subdued.
Large banks have also seen buying on cheaper valuations. Some fund managers also bought into select companies that have gained market share, like InterGlobe Aviation and Inox Leisure, which are seen among the top beneficiaries of the re-opening trades.
Meanwhile, FPI's sold ₹12,000 worth of shares in the financial services sector in May.