Mutual Funds Invest Heavily in HDFC, TCS & 8 Other Stocks in February Amid Market Correction
Market Correction
HDFC : The Indian stock market has been facing significant volatility over the past six months, with the Nifty 50 falling over 16% from its all-time high of 26,277 in September last year to a recent low of 21,964. This decline has wiped out investor wealth by nearly ₹95.22 lakh crore, as the total market capitalization of NSE-listed companies plunged from ₹477.93 lakh crore to ₹382.71 lakh crore.
However, amidst the massive sell-off by Foreign Portfolio Investors (FPIs), mutual funds have been steadily absorbing the selling pressure by investing in high-quality companies at more attractive valuations. In February alone, mutual funds significantly increased their stakes in several blue-chip stocks, with HDFC Bank leading the pack with an investment of ₹6,000 crore.
Top 10 Stocks with Maximum Mutual Fund Buying in February
Below is a detailed analysis of the top 10 stocks where mutual funds have increased their holdings significantly in February:
1. HDFC Bank
HDFC Bank, India’s largest private-sector bank, witnessed the highest mutual fund buying, amounting to ₹6,000 crore. Mutual funds now own 23.93% of the bank’s total shares, attracted by its strong financial performance, extensive branch network, and leadership in digital banking solutions.
2. Hexaware Technologies
Hexaware Technologies, a global IT and consulting firm specializing in digital transformation and cloud computing, saw mutual funds invest ₹4,200 crore. Their ownership in the company now stands at 8.25%.
3. Tata Consultancy Services (TCS)
TCS, a global leader in IT services and consulting, attracted ₹3,900 crore in mutual fund investments. They now own 4.3% of the company’s total shares, reinforcing their confidence in the company’s robust order book and strong revenue growth.
4. UltraTech Cement
UltraTech Cement, India’s largest cement manufacturer, saw mutual funds buy ₹2,400 crore worth of shares. Their total stake in the company now stands at 12.26%. The company is well-positioned to benefit from rising infrastructure development and housing demand.
5. Kotak Mahindra Bank
Kotak Mahindra Bank, one of India’s leading private banks, attracted ₹2,300 crore in investments. Mutual funds now hold 17.44% of the total shares, betting on the bank’s diversified financial services and strong capital adequacy.
6. Axis Bank
Axis Bank, another major private-sector bank, witnessed ₹1,900 crore worth of mutual fund inflows. The bank has demonstrated steady loan growth and improving asset quality, prompting mutual funds to raise their stake to 29%.
7. Power Grid Corporation of India (POWERGRID)
POWERGRID, a state-owned enterprise responsible for India’s electricity transmission network, received ₹1,800 crore in mutual fund investments. They now own 12.10% of the company, as investors see stable revenue generation from regulated assets.
8. Larsen & Toubro (L&T)
L&T, a diversified conglomerate with interests in engineering, construction, and infrastructure, saw mutual funds buy shares worth ₹1,700 crore. Their ownership in the company has now increased to 19.68%.
9. ICICI Bank
ICICI Bank, one of India’s largest private-sector banks, saw mutual fund investments of ₹1,700 crore. The mutual fund stake in the bank now stands at 29.50%, reflecting confidence in its strong retail banking and loan growth.
10. Varun Beverages
Varun Beverages, a leading franchisee of PepsiCo in India and international markets, received ₹1,600 crore from mutual funds. They now hold 29.50% of the company’s total shares, betting on its strong beverage distribution and market expansion strategies.
Financial Ratios of Key Stocks Bought by Mutual Funds
| Stock | P/E Ratio | P/B Ratio | ROE (%) | Mutual Fund Holding (%) | Amount Invested (₹ Cr) |
|---|---|---|---|---|---|
| HDFC Bank | 18.5 | 2.9 | 14.2 | 23.93% | 6,000 |
| Hexaware Technologies | 22.3 | 3.5 | 17.8 | 8.25% | 4,200 |
| TCS | 29.4 | 12.6 | 43.7 | 4.3% | 3,900 |
| UltraTech Cement | 27.1 | 4.1 | 12.9 | 12.26% | 2,400 |
| Kotak Mahindra Bank | 25.6 | 3.9 | 13.5 | 17.44% | 2,300 |
| Axis Bank | 15.8 | 2.5 | 16.7 | 29% | 1,900 |
| POWERGRID | 10.3 | 2.1 | 17.4 | 12.10% | 1,800 |
| Larsen & Toubro | 21.7 | 3.2 | 14.5 | 19.68% | 1,700 |
| ICICI Bank | 18.2 | 2.8 | 15.9 | 29.50% | 1,700 |
| Varun Beverages | 41.5 | 10.2 | 32.4 | 29.50% | 1,600 |
Key Takeaways
- Mutual Funds are Buying Big – Despite market corrections, mutual funds have been accumulating shares of fundamentally strong companies at lower valuations.
- Banking Sector in Focus – Out of the top 10, four companies belong to the banking sector, indicating strong confidence in financial stocks.
- Infrastructure and IT Stocks Gaining Interest – Stocks like L&T, UltraTech Cement, TCS, and Hexaware reflect long-term investment themes in infrastructure and digital transformation.
- Steady Defensive Plays – Investments in POWERGRID and Varun Beverages suggest mutual funds are also focusing on stable revenue-generating companies.
Frequently Asked Questions (FAQs)
1. Why are mutual funds investing in these stocks despite market corrections?
Mutual funds see these corrections as an opportunity to buy quality stocks at lower valuations, ensuring long-term gains.
2. Which sector saw the most mutual fund buying?
The banking sector, with HDFC Bank, Kotak Mahindra Bank, Axis Bank, and ICICI Bank leading the way.
3. Why did HDFC Bank receive the highest investment?
HDFC Bank is India’s largest private bank with strong financials and high digital adoption, making it a preferred long-term bet.
4. Is it a good time for retail investors to follow mutual fund investments?
Retail investors can consider these stocks but should evaluate risk tolerance, financial goals, and consult financial advisors before investing.
5. What does the high investment in Varun Beverages indicate?
It shows growing confidence in India’s consumer sector and the increasing demand for branded beverages.
With mutual funds strategically increasing their holdings in top companies, retail investors can take cues from these investments to make informed decisions. Keep an eye on these stocks as they may play a crucial role in market recovery!
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.