Domestic mutual funds seem to have taken a bearish stance in the stock market during the last quarter, when they offloaded shares worth about USD 1.2 billion (Rs 6,625 crore) despite a significant uptrend in the overall market and impressive buying by foreign investors.
Individually, sectors like financials and consumer were among the worst hit in terms of net-sale by mutual funds, while net purchases were made in stocks from industrial and consumer staple segments.
According to global research report by BofA-Merrill Lynch, domestic MF has emerged as net sellers during July-September quarter 2012 with an outflow of USD 1.19 billion compared to a net inflow of USD 50 million in the previous quarter (April-June 2012).
The top stocks sold by domestic mutual funds are ICICI Bank, Tata Consultancy Services (TCS), Power Finance, Reliance Industries (RIL) and ONGC, while most bought shares are Cairn India, Tech Mahindra, Petronet LNG, Canara Bank and HDFC Bank.
Individually, domestic MFs lowered its exposure to companies like ICICI Bank with sale of shares with an estimated USD 190 million, USD 100 million each in RIL and
ONGC, USD 60 million in ITC, USD 50 million in Jindal Steel, USD 40 million each in BPCL, BHEL, HUL and Tata Steel.
On the other hand, domestic mutual funds major investment during the quarter included Cairn India (USD 240 million), Canara Bank (USD 40 million) and HDFC (USD 30 million).
The report said industrial and consumers staples are one of the biggest overweight sector for domestic MF's, while they are underweight on areas like financials, software, metals and mining utilities and energy.
"Cement saw an increase in its underweight due to inclusion of Ultratech in Nifty resulting an increase in sector weightage in the index. Underweight in metals and
mining reduced due to exclusion of Sail etc from Nifty index thereby reducing the sector weightage in the index," the report said.
Interestingly, FIIs infused a net amount of about Rs 40,000 crore in the entire Indian stock market in July-September period on the back of a slew of reforms initiated by the government, pushing the broader market Sensex to surge over 1,300 points or more than seven per cent.
In terms of sectors, the domestic mutual funds sold shares valued at USD 231 million in the consumer sector followed by finance portfolio (USD 224 million), metal and mining (USD 182 million), auto (USD 140 million), telecom (USD 118 million) software (USD 92 million), the report said.
In contrast, mutual funds investment in the other sector stood at USD 41 million, followed by USD 18 million in the cement category, USD 9 million in the rela estate space.