MFs add IT and pharma stocks for uncertain times

Mutual fund managers retained their exposure to defensives such as pharmaceuticals and technology in July while handpicking shares of companies that have the potential to beat estimates over the next couple of quarters. The focus was on buying stocks that could withstand further turbulence with the economy set to contract at the highest pace ever in FY21. Some of the funds booked profits in Reliance Industries, the best performing blue-chip since March 23, when the Nifty hit a four-year low.

Four stocks that attracted the top five MFs

WIPRO
CMP: Rs 277
Bought by: HDFC MF Market cap: Rs 1,58,290 cr
A key reason for the large interest from fund managers is because Wipro had been trading cheaper than its peers. Besides, contrary to the Street’s expectations, the company’s operating margin rose 140 basis points sequentially and 60 bps year-on-year in the June quarter. This encouraging financial performance impressed analysts and managers alike. Also, it is one of the few companies which can potentially benefit from the government’s focus to develop domestic cyber defence capabilities.

BALKRISHNA INDUSTRIES
CMP: Rs 1,385
Bought by: Nippon MF Market cap: Rs 26,773 crore
The specialised tyre-manufacturing company, which exports 90%, benefited from off-highway tyre demand in the agriculture sector in the European Union (EU), especially during the lockdown phase. The company continues to benefit from strong demand for agri-tyres in India, too. Agri-tyre sales rose 44% year-on-year and 32% month-on-month in June. This is why managers and analysts alike remain bullish on the stock.

INDIAMART INTERMESH
CMP: Rs 2,978
Bought by: Aditya Birla SL MF Market cap: Rs 8,618 cr
A rush to digital is attracting fund managers to Indiamart. They believe this company is a big beneficiary of the lockdown as SMEs in stress will incrementally move business online, bringing business to platforms like Indiamart. The company is the largest online B2B marketplace with a 60% market share in online B2B classifieds. It enables two-way interactions: suppliers can post listings and buyers can post their request for quotations, too. The portal has 600 million monthly visitors.

HDFC LIFE INSURANCE
CMP: Rs 599.65
Bought by: SBI MF Market cap: Rs 1,21,090 cr
A good product mix, strong parentage and strong performance make this a structural growth story for many fund managers. They believe in an era of inevitable slowdown, the company is better positioned to tackle the upcoming growth challenges. Increased opportunities for protection products will act as a growth trigger and the company with the highest share in protection stands to gain.