Mutual funds sell IT, banking stocks in March; go long on auto, pharma

Mutual funds were selling banking and IT stocks, while some automobile and pharma stocks witnessed buying in the month of March.

The top six mutual fund houses — HDFC MF, ICICI Prudential AMC, Reliance MF, Birla Sun Life AMC, UTI MF and SBI Funds Management, which together account for 66 per cent of equity AUM — sold banking and IT stocks such as Axis, ICICI , SBI, Bank of Baroda, HCL Tech and Infosys. Pharma Stocks (such as Aurobindo Pharma, Dr Reddys, Lupin), Eicher Motors and Bajaj Auto saw some buying by these funds.

With asset quality of banks showing little sign of improvement, and ground-level activity yet to pick up, high NPAs of state-run banks are a challenge. Hence, even though valuations of PSU banks look cheap, mutual funds were sellers in them. Pharma companies witnessed buying as analysts expect a strengthening dollar to help these companies which are likely to deliver strong results for the last quarter.

On the other hand, with demand from sectors such as insurance, oil & gas, energy and telecom stagnating, IT companies could deliver muted growth and hence some funds were seen booking profits in Infosys and HCL Tech.