What mutual funds did with Adani stocks, Zomato and Paytm last month

NEW DELHI: Mutual funds chose to play it safe with Hindenburg-hit Adani stocks in February by paring stakes in 4 of them. At the same time, money managers were seen showing faith in the path to profitability of new-age tech stocks like Zomato and Paytm.

During the month, MFs offloaded stakes in Adani Ports, Adani Enterprises, Adani Total Gas and Ambuja Cements. These 3 Adani stocks were among the top 10 sells of mutual funds among largecaps in February, shows market data from ICICI Direct Research.

Since the release of the Hindenburg report in late January, the combined market capitalisation of all 10 Adani stocks have reduced to half with stocks falling up to over 70% from their 52-week high levels. In the last few days, however, Adani stocks have seen recovery with flagship entity Adani Enterprises zooming 57% from February 28.


Sector-wise, MFs were seen increasing exposure to oil and gas, IT, staples and discretionary. On the other hand, they lowered exposure to metals and mining, healthcare, telecom, media and industrials.

Top mutual funds buys in February
Equity mutual funds, which attracted inflows of Rs 15,685 crore in February, bought shares of Interglobe Aviation or IndiGo, PSU stock GAIL, realty player Macrotech Developers, Tata Motors, Tech Mahindra, HDFC AMC, PVR, Indiabulls Housing Finance and Nazara Technologies.

MFs also bought 38 lakh shares of Paytm in February. The new-age stock, which is down 31% from its 52-week high, was among the top 10 midcap picks of mutual funds during the month.

The largest pick among all largecaps was IndiGo, which reported profit in the December quarter after three consecutive loss-making quarters.

SBI Mutual Fund, India's largest AMC, bought 1.61 crore shares of Zomato in the month. Other top buys included United Spirits and Info Edge.

For HDFC AMC, Adani Group company ACC was among the top 10 buys during the month, along with Dixon Technologies, Titan, PNB and Gland Pharma.

Top mutual funds sells
Besides Adani stocks, mutual funds were seen offloading stakes in Vedanta, Tata Power, Bank of Baroda, Vodafone Idea, Canara Bank, Anupam Rasayan and Easy Trip Planners.

What should investors do?
Although new-age stocks have started gaining traction once again among investors, experts say the path to profitability is going to be a long one.

"The key is management execution and management communication with minority shareholders. We believe some of these businesses have an uphill task of first identifying the path to profitability, second convincing the investors that they will adhere to that path to profitability and lastly walking the talk and executing in the same manner over the next few quarters. It's a long journey for them before they will win the trust of listed equity investors," said Anand Shah, Head of PMS & AIF Investments at ICICI Prudential AMC.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)