Mutual funds load up on these quality mid-cap stocks

Mumbai: Mutual fund managers have been consistent buyers in about 20 mid-cap stocks in each of the past eight quarters amid the sharp swings in the stock market. Stocks such as Orient Electric, V-Mart Retail, Bharat Forge, Radico Khaitan, Birlasoft, Fortis Healthcare, Jamna Auto, Subros, Uno Minda, and Sudarshan Chemicals, among others, have seen an increase in mutual fund holdings in every three-month periods in the past two years.

A consistent increase in mutual fund holdings indicates the confidence of fund managers in these businesses, said analysts.

"Fund managers are looking at those companies growing their sales and profit constantly or increasing margins quarter-on-quarter and return ratios with business by growth catalyst," said Jitendra Upadhyay, analyst, Bonanza Portfolio. "The better way to handle stock market correction is to stay invested for a long, specifically, if the money you have invested in the market is not needed for the next five years."


Domestic MFs have bought shares worth ₹2.22 lakh crore in the past one year after selling shares worth ₹90,000 crore in the previous year.

While the Nifty and Nifty Midcap 100 have gained around 6% in the last one year, Nifty Smallcap 100 has declined more than 14% during this period. The stocks in which mutual funds have raised their holdings have consistently given an average return of 8% in the past one year and 115% in the previous two years.

"Midcaps became reasonable due to the carnage in the last few months. The global economy is contemplating a risk of recession, but the probability of a recession in India is low. It is a good time to cherry pick stocks and sectors," said Vinod Nair, head of research, Geojit Financial Services.