Mutual funds add IT and pharma stocks as well to deal with uncertain times

Mutual funds add IT and pharma stocks as well to deal with uncertain times

Mutual fund managers have retained exposure to defensives like IT and pharmaceuticals, and have handpicked shares of companies that can potentially beat estimates in a coming couple of quarters. The key focus here is on buying stocks that can withstand further turbulence that might shake the economy, now that the economy is contracting at its highest speed since FY21. Some funds also booked profits in Reliance Industries. 

Here are four stocks that have attracted the top five MFs:

WIPRO

CMM: INR 277

Bought by: HDFC MF

Market cap: INR 1,58,290 cr

WIPRO is trading cheaper than its peers right now, which is a key reason for the large interest from fund managers. Additionally, the operating margins of the company rose 140 basis points and 60 bps year on year in the June quarter. This is encouraging performance indeed, which has impressed both analysts and managers. WIPRO is also one of the few companies that can benefit from the government’s focus on developing cyber defense capabilities. 

BAL KRISHNA INDUSTRIES

CMM: INR 1,385

Bought by: Nippon MF

Market cap: INR 26,773 crore

A specialized tyre manufacturing company that is exporting 90 percent, the company benefitted greatly from off-highway tire demand in the agricultural sector in the EU, especially during the lockdown. The company is getting strong demand for agri-tyres in our own country too. Sales rose by 44 percent year on year and 32 percent month on month for June. 

INDIAMART INTERMESH

 CMP: Rs 2,978

 Bought by: Aditya Birla SL MF 

Market cap: Rs 8,618 cr

Fund managers are getting attracted to Indiamart, thanks to this digital rush. As per fund managers, the company has been a big beneficiary of the lockdown. SMEs in stress are moving their business online, and this is bringing business to platforms like IndiaMart. The company is presently the largest online B2B marketplace and has a 60 percent share in online B2B classifieds. The company facilitates a two-way interaction, wherein suppliers can post their listing, and buyers can post their requirements and ask for quotations. 600 million visitors visit the site every month!

 HDFC LIFE INSURANCE

 CMP: INR 599.65

 Bought by: SBI MF

 Market cap: Rs 1,21,090 cr

The company boasts of a good product mix, with a consistently strong performance and strong parentage as well. This makes it attractive to many fund managers, who believe that in times of this inevitable slowdown, the company will be able to tackle forthcoming challenges. There are increasing opportunities for protection products which will greatly help the company to grow.