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Stock Analysis, IPO, Mutual Funds, Bonds & More

FPIs buy quality on the cheap, local MFs capital goods, utilities

FPIs enhanced their exposure to beatendown quality stocks in past one year.

, ET Bureau|
Jun 10, 2019, 08.23 AM IST
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BCCL
Buy-stocks-1--BCCL
Foreign portfolio investors (FPIs) and local mutual funds typically make investment decisions that other classes of investors, including HNIs, often follow, albeit with a lag.
ET Intelligence Group: Just what are the biggest funds in the business buying these days?

Foreign portfolio investors (FPIs) and local mutual funds typically make investment decisions that other classes of investors, including HNIs, often follow, albeit with a lag. These bulge-bracket funds have deep pockets, are better trend-spotters across asset classes and geographies, and focus on long-term wealth creation. So, it makes a lot of sense to study their investment bets.

ET Intelligence Group studied the shareholding data of companies in the BSE 100 and BSE Midcap indices to ascertain what FPIs and mutual funds have bought in the past one year. The study showed that FPIs enhanced their exposure to beatendown quality stocks.

These are Eicher Motors, HDFC Life Insurance, Castrol India and Colgate-Palmolive India. FPIs have enhanced stakes in these companies by 1.2-5 per cent in this period. These companies promise high returns and have stable growth prospects, while valuations seem attractive when compared with the recent past.

FPI snip 3

In the same period, mutual funds have loaded up on capital goods and utilities. NTPC, Larsen & Toubro, Bharat Electronics, and Cummins India have seen mutual funds increase their stakes in the 1.5-7 per cent range.

There are two major reasons mutual funds bought into capital goods and utilities. First, these companies have shown high growth in their short-cycle order books. Two, in the past one year, these companies have also beaten their order inflow guidance despite less fresh business from the government.
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