Shopping in the Dip
Fund managers found the market crash an excellent opportunity to invest some cash in the markets
By Research Desk | Jul 27, 2006
When markets tank, some people always lose but for some it is an opportunity to buy things cheap.
In the words of legendry investor Warren Buffet, you should "look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it." Wild gyrations indeed give investors an opportunity to buy stocks at attractive valuations.
They also are good times to analyse how the funds managed the fluctuations.
Between May 11 and June 30, mutual funds invested a net Rs 4,709 crore in equities. Managers found it an excellent opportunity to offload some cash collected during the recent NFOs. In June, diversified equity funds added seven stocks, while exited 19 stocks. Overall, they increased exposure in 275 stocks, maintained status quo in 100 and sold shares of 306 companies.
Steel Authority of India attracted maximum interest. Five new funds bought the stock, taking the total number of funds invested in SAIL to 22 in June. Together, the funds added close to one crore shares of SAIL during the month.
At the other extreme was Hindalco Industries. The aluminium major was dropped from 10 diversified equity funds' portfolio, taking the total number of funds invested in the stock to 70 in June. Funds sold more than 1.35 crore shares of Hindalco over the month.
Patel Engineering was dropped from maximum number of portfolios. As many as 16 funds chose to exit from the stock, while 24 still continue to hold position here. On the other hand, Zee Telefilms saw massive buying with nine funds including the stock in their portfolios in June.
Despite the crash, mutual funds' hunt for new options continued with 11 fresh stocks entering fund portfolios for the first time in May-June. Of these, eight got listed during the period, one is an unlisted company, while Arihant Foundations & Housing and International Travel House were included after massive run up and subsequent drop in price in May-June. DBS Chola Midcap and DBS Chola Opportunities added Arihant Foundations & Housing, while Kotak Lifestyle fund bought the other. DWS Taxsaving added unlisted Mahindra Automotive Steels in its portfolio in June.