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The Dumping Zone

Many stocks bore the brunt of the falling markets & were sold off in chunks by funds. These included

Allright, so we had a look at the ‘Most Fancied Buys’ of June 2008 – stocks which the fund managers bought the most. The financial services sector was on the top of that list with Infrastructure Finance Corporation being the most bought stock of the month. Well, now let’s have a look at the major sell-offs of June.

When the markets are down, a number of stocks suffer a major brunt of the downfall. And predictably, fund managers try to offload these stocks to try and escape with as little damage as possible. In June, the biggest sell-off was the diversified mid-cap stock Aditya Birla Nuvo. Mutual funds sold 8.4 lakh shares of the company, worth nearly Rs. 100 crore. This wasn’t really a surprise as the company’s stock fell by 18 per cent.

Other diversified companies that were sold off by mutual funds included Jai Prakash Associates, Century Textiles & Inds, and Greaves Cotton. Jai Prakash Associates was dumped by 14 funds, the told sell-off amount amounting for Rs. 90 crore. The company’s stock had fallen by 33 per cent during the month. The other companies in the list witnessed steep falls as well.

Tech major Infosys Technologies had a somewhat mixed month. The stock was amongst the major sell-offs but was added by 16 funds to their portfolios as well. The total holding of the stock amongst the funds was reduced by nearly Rs. 67 crore. The stock’s price was down by 11 per cent.

A relatively surprising development during June was that not many significant sell-offs were noted among the banking stocks even though the banking sector index, BSE Bankex was the worst hit index in June. Only

Tech major State Bank of India (5.4 lakh shares worth nearly Rs. 61 crore sold) and Punjab National Bank (11.14 lakh shares worth Rs. 42 crore sold) bore the brunt of the soaring interest rates. Both stocks witnessed an almost similar fall during the month: State Bank of India was down by 23 per cent and Punjab National Bank was down by 22 per cent.

Among the energy stocks, funds sold Reliance Industries and Cairn India in significant numbers. In Reliance Industries, funds had sold 4.5 lakh shares worth nearly Rs. 96 crore whereas in Cairn India, funds sold 21 lakh shares worth nearly Rs. 58 crore.

Funds also pared their holdings in entertainment stocks including New Delhi Television and Zee Entertainment Enterprises. Funds sold 21.2 lakh shares worth nearly Rs 80 crore in New Delhi Television and 29.7 lakh shares worth around Rs 60 crore in Zee Entertainment Enterprises. Interestingly, both these stocks fell much lesser than the market.

Automobile companies, Mahindra & Mahindra and Tata Motors were also sold in huge chunks. 13 funds moved out from Mahindra & Mahindra while five funds dropped Tata Motors. In June, funds sold 11.7 lakh shares worth nearly Rs 57 crore of Mahindra & Mahindra and 10.5 lakh shares worth nearly Rs 45 crore of Tata Motors. Mahindra & Mahindra was down by 18 per cent in June while Tata Motors lost 26 per cent.

Among infrastructure and construction companies, funds offloaded Simplex Infrastructures, Madhucon Projects and Alstom Projects India. Funds sold 14.3 lakh shares worth nearly 61 crore of Simplex Infrastructures, 12.6 lakh shares worth around Rs 45 crore of Madhucon Projects and 12.3 lakh shares worth around Rs. 42 crore of Alstom Projects. While Alstom project was down by 37 per cent in June, the other two also fell more than the market.

Other stocks which were sold-off in large numbers by funds included Sterlite Industries (India), Asian Paints (India) and AIA Engineering. Nine funds had moved out from Sterlite Industries. While Asian Paints (India) was down by 10 per cent in June, the other two stocks witnessed a steeper fall than the market.