ETMarkets did an analysis of the stocks held by more than 100 mutual fund schemes as of September, and their performance in 2023 so far.
The analysis revealed seven stocks which were held by mutual funds across more than 100 schemes as of the last month, and have given high returns in 2023. Of the 7 stocks, four stocks have even turned multibaggers.
These seven stocks are Tata Motors, Cholamandalam Investment and Finance, Zomato, Polycab India, Aurobindo Pharma, Power Finance Corporation, and REC Ltd.
Of these stocks, Polycab India, Aurobindo Pharma, Power Finance Corp, and REC have given multibagger returns of 110-154% so far in 2023.
Barring Tata Motors, all the other stocks are part of the midcap and smallcap segment, which did exceptionally well in this year and outperformed the largecaps by a wide margin.
In 2023 so far, the mutual fund industry has witnessed maximum inflows into smallcap funds to the tune of Rs 28,984 crore, data shared by the Association of Mutual Funds in India (AMFI) showed.
In midcap funds, MFs have seen inflows worth Rs 16,446 crore, whereas in largecap funds, there were net outflows of Rs 3,718.3 crore.
Within the midcap and smallcap segment, public sector stocks grabbed a lot of interest due to attractive valuations and the increasing bet on India’s growth story.
Power Finance Corporation and REC are among the top performing public sector stocks, giving handsome returns to investors.
For four consecutive quarters, mutual funds increased their holding in Power Finance Corp, which has given 124% returns so far in 2023.
As of September end, they cumulatively held 12.38% stake in the company, compared to 11.46% in the same period last year, Trendlyne data showed.
In REC, which has given 154% returns to investors so far in 2023, mutual funds’ holdings went up to 8.74% as of September end, from 7.94% a year ago.
“REC and PFC stocks’ impressive performance was driven by factors like government support, robust financials, and a positive power sector outlook,” said Sonam Srivastava, founder and fund manager, Wright Research PMS.
While the current momentum and sectoral outlook seem positive, potential risks like interest rate fluctuations, cyclical downturns in the power sector, and increased competition cannot be ignored, Srivastava said, recommending investors to assess the current valuations relative to their fundamentals and historical averages.
Aurobindo Pharma is the third-best performing midcap stock, giving 108% returns to investors so far in 2023. Mutual funds have steadily increased their holding in the drugmaker in the last five months.
The stocks’ stellar performance in 2023 underscores its strategic positioning in the global pharmaceutical landscape.
According to Srivastava, the rising global demand for affordable generics offers Aurobindo a significant growth avenue.
Additionally, its diversified product range and global presence provides resilience against market volatilities.
Given its strong fundamentals and the growing generics market, accumulating Aurobindo Pharma on dips, therefore, is prudent for long-term investors, the smallcase manager said.
Among stocks in the new-age consumer technology space, Zomato stole the limelight as the online food delivery aggregator’s stock turned a multibagger.
In the last 4 months, mutual funds have consistently bought Zomato shares. MFs held around 91 crore shares of Zomato in September, compared to 82.4 crore shares in August.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)