Top Mutual Fund Picks: Suzlon Energy Leads Small Caps, HDFC Bank and Others in Large Caps

Mutual funds (MFs) showed interest in acquiring shares of several large-cap companies including HDFC Bank Ltd, Samvardhana Motherson, Vedanta Ltd, State Bank of India, ITC Ltd, and Bank of Baroda.

In January, top domestic mutual funds increased their holdings in small-cap stocks such as Suzlon Energy Ltd, Allcargo Logistics Ltd, Rain Industries Ltd, and Karur Vysya Bank Ltd. Conversely, they reduced their stakes in small-cap shares like SJVN Ltd, Indian Energy Exchange Ltd, CESC Ltd, South Indian Bank Ltd, and NMDC Ltd during the same period.

In the midcap segment, mutual funds were observed buying stocks of Bank of India Ltd, GMR Airports Infrastructure Ltd, Jubilant Foodworks Ltd, One 97 Communications Ltd (Paytm), and Nykaa, among others. Conversely, they reduced their holdings in midcap firms such as Vodafone Idea Ltd, NHPC, ZEE Entertainment Enterprises, IRFC, and Federal Bank, among others.

In January, mutual funds showed interest in large-cap stocks like HDFC Bank Ltd, Samvardhana Motherson, Vedanta Ltd, State Bank of India, ITC Ltd, and Bank of Baroda, among others. According to PhillipCapital, MF equity net flows for January amounted to Rs 21,750 crore, compared to Rs 16,970 crore in December 2023. Excluding new fund offers (NFOs), net flows stood at Rs 20,780 crore, up from Rs 10,640 crore in December.

In January, mutual funds exhibited increased interest in several sectors. The oil & gas sector witnessed higher buying, with mutual fund weight at 6.5 percent, up by 60 basis points (bps) month-on-month. This was followed by the healthcare sector, with a weight of 7.4 percent, up by 31 bps, and the industrials sector, with a weight of 8 percent, up by 12 bps. Additionally, utilities saw an increase to 3.6 percent, up by 10 bps, while the IT sector stood at 9.5 percent, up by 8 bps.

Mutual funds decreased their holdings in several sectors in January. Financials witnessed a reduction, with a weight of 28.3 percent, down by 92 basis points (bps) month-on-month (MoM). Similarly, staples saw a decline to 4.8 percent, down by 25 bps MoM, while agriculture & chemicals decreased to 2.3 percent, down by 19 bps MoM. Additionally, discretionary sectors experienced a decrease to 6.9 percent, down by 11 bps MoM, and other sectors fell to 1.3 percent, down by 4 bps MoM.

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