Mutual funds shuffle banking & fin portfolios, pare exposure to large-cap IT stocks

Mutual funds shuffled their equity holdings in the banking and financial spaces in December last year. They mostly cut their exposure to large-cap IT stocks ahead of Q3 results in January.

Within banks, HDFC Bank, ICICI Bank, SBI and Axis Bank witnessed the maximum amount of reshuffling by fund managers, who were both buyers and sellers in many of these stocks. They, however, purchased mid- and smallsized banks like RBL Bank, Bank of India and South Indian Bank — an indicator of their continued bullishness on the sector.

Within IT stocks, some fund houses cut their holdings in Infosys, HCL Technologies and Tech Mahindra. The Chinese government relaxing Covid-19 norms and supporting its real estate market saw some fund managers selectively buying metal stocks like NMDC and Jindal Stainless.

Attractive valuations, lower weightage and increasing sales from the US markets coupled with new launches saw some buying in companies like Lupin and IPCA Labs. Softening of commodity prices, which will lead to improved margins, also led to some funds buying auto and auto-ancillary companies such as Apollo Tyres, TVS Motors and Sundram Fasteners.