HDFC MF exited bluest of blue chips in April to lap up PSUs, insurers, auto stocks

HDFC Asset Management, India’s second largest mutual fund house by assets, increased its holding in select life insurance, auto ancillary, banking, metals, power, oil & gas and engineering firms in April even as equity benchmarks Sensex and Nifty climbed nearly 15 per cent during the month.

The fund house offloaded some shares in the bluest of blue chips, including Infosys (1.32 crore shares) and Reliance Industries (30.59 lakh), after these stocks recovered smartly from their March lows.

RIL this past fortnight reported a 37 per cent drop in March quarter profit at Rs 6,546 crore, as a rise in revenue from consumer-facing businesses was not enough to shield the company from drop in revenue in the petrochemical business and inventory losses resulting from a decline in global oil prices and demand destruction due to the coronavirus-induced lockdown.

RIL shares have recovered over 75 per cent from the 52-week low of Rs 875.70 hit on March 23.

“I will not invest fresh money in RIL after the recent runup. However, investors with 3-5 years perspective can consider it,” says AK Prabhakar, Head of Research IDBI Capital Markets.

IT major Infosys reported a 6.3 per cent rise in consolidated net profit for March quarter but refrained from providing any revenue outlook for FY21, citing uncertainty amid coronavirus outbreak, which is expected to impact its business in the near term.

The IT major missed modest expectations on both revenue and margin fronts, said Emkay Global Financial Services. The brokerage has a ‘hold’ rating on Emkay with a price target of Rs 590.

HDFC Mutual Fund also sold over 10 lakh shares each in Siemens, Tata Chemicals, Cipla and Sun Pharmaceuticals during April. It bought over 50 lakh shares each in Engineers India, NTPC, Axis Bank, ICICI Bank and Hindalco.

ICICI Bank last week posted a 26 per cent rise in standalone net profit at Rs 1,221 crore for March quarter. Domestic brokerages are also bullish on the private sector lender. Phillip Capital recently came out with a ‘buy’ on ICICI Bank with a price target of Rs 450.

HDFC Mutual Fund’s other major buys in April included Power Grid, Vedanta, HPCL, Bharat Electronics, NHPC, Apollo Tyres, Bharat Petroleum, FirstSource Solutions and REC, among others. The fund house added 20 to 46 lakh additional shares of these companies during the month.

HDFC AMC also added shares of several PSUs during month, including Bank of Baroda (1.23 lakh shares), Coal India (1.22 lakh shares), State Bank of India (0.89 lakh shares) and Mishra Dhatu Nigam (0.70 lakh shares).

Elsewhere, it bought additional shares in HDFC Bank (3.54 lakh shares), HDFC Life Insurance (3.32 lakh shares), SH Kelkar (3 lakh shares), La Opala RG (2.46 lakh shares), Radico Khaitan (2.34 lakh shares), Inox Leisure (2.26 lakh shares), SBI Life Insurance (1.98 lakh shares) and Gabriel India (1.18 lakh shares).

Kotak Institutional Equities find the insurance space attractive. The brokerage has an ‘add’ rating on HDFC Life with a price target of Rs 530. Nirmal Bang Securities is positive on SBI Life with a price target of Rs 914.

HDFC AMC has also sold over 35,000 shares each in M&M, Colgate-Palmolive, Wipro, Bajaj Consumer, Max Financial, ITC and HCL Technologies. It completely exited ABB Power, Indostar Capital, JK Cement, L&T Finance, Manappuram Finance, Muthoot Finance and SAIL.

Indraprastha Gas and Info Edge were among the stocks the fund house entered afresh, Ace Mutual Fund data showed.