You, as an investor in equities through mutual funds, have seen the stock markets rise from the astonishing depths that they had fallen to in 2008. But after a historic rally in the stock markets, especially in the month of May, almost every investor had a reason to be cheerful as most equity-oriented fund was registering great gains.
Here, we chart the process of what the mutual funds bought to put you in this position of prosperity.
Among the stocks that found favour among the fund managers and topping the buying list was telecom major Bharti Airtel. The stock was added to their portfolio by 18 more funds, taking the total to 240 funds. Total purchases in the stock was worth Rs 563 crore. The reason behind the popularity boost was that Bharti Airtel had recently announced that it has revived talks with MTN for a merger, which if it goes through, will result in the creation of the world’s third largest telecom major. But this was not taken well by the market and the stock fell 5.41 per cent on the day of announcement.
But it seems that fund managers took this as a great opportunity to raise their stake in the stock, or to expose themselves to the stock, as the deal is supposed to have a positive side over the long-term. The stock gained just 9.39 per cent compared to around 28 per cent rise in Sensex in May 2009. HDFC Equity was the biggest purchaser of the stock at Rs 120.94 crore.
The second most-bought stock was ONGC. The company’s stock worth Rs 248 crore was bought by mutual funds, while two more funds added the stock to their portfolio. The stock outperformed the Sensex with a return of 35.86 per cent. Again HDFC Equity made the highest purchases of Rs 77.75 crore in the stock and following it was Reliance Growth (Rs 66.85 crore) and Reliance Equity (Rs 52.40 crore.)
Third in line was the realty company, Indiabulls Real Estate. Mutual funds bought stocks worth Rs 237.42 crore in the stock. Fund managers’ interest in the sector can be seen from the fact that another real estate company DLF was also among the top five most-bought stocks of the month -- the sectoral index BSE Realty turned in gains of around 79 per cent in the month and DLF and Indiabulls Real Estate rose 74.66 per cent and 90.74 per cent respectively during the month.
Also, in demand were power sector stocks. Mutual funds made purchases of over Rs 100 crore each in four stocks -- PTC (Rs 155.07 crore), Suzlon Energy (Rs110.79 crore), Tata Power (Rs 110.56 crore), NTPC (Rs 107.08crore).
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