LIC, ITC to Axis Bank: Mutual funds bullish on these large-cap stocks. Should you buy any of these?

Even though inflows into equity mutual funds declined 14 per cent month-on-month to ₹35,943.49 crore in November against ₹41,886.69 crore in October, fund houses continued to add large-cap stocks such as Life Insurance Corporation of India (LIC), ITC, Hindustan Unilever (HUL), Larsen & Toubro (L&T), and Axis Bank for the third consecutive month, reflecting their long-term bullish stance on these stocks.

Brokerage firm Nuvama Wealth Management, in its mutual fund portfolio analysis report for the month of November, highlighted that LIC, ITC, HUL, L&T and Axis Bank were among the key additions by fund houses for three consecutive months. On the flip side, HCL Technologies, Hindustan Aeronautics, Apollo Hospitals, Solar Industries India and Cummins India were among the stocks that fund houses have been reducing for the last three consecutive months, according to Nuvama.

CRISIL, Exide, Tata Technologies, Godrej Industries and Honeywell Auto were among the mid-cap stocks that mutual funds added for the last three consecutive months, while Kaynes Tech, Suven Pharma, Endurance Tech, Gillette India and Aegis Logistics were among the key reductions, said Nuvama.

Similarly, in the small-cap segment, key additions were Galaxy Surfactants, Intellect Design, Arvind Ltd, Rashtriya Chemicals and Saregama India, while key reductions were Kirl Ferrous, Cera Sanitary, Tanla Platforms, Just Dial and Symphony, Nuvama said for three consecutive months.

Inflows to equity mutual funds declined over 14 per cent month-on-month in November due to market correction amid concerns over weak September quarter earnings, stretched valuations, foreign capital inflow amid rising dollar index and US bond yields and escalating geopolitical tensions. However, the magnitude of the fall subsided as equity benchmark Nifty 50 declined 0.30 per cent in November after an over 6 per cent fall in October. Nifty 50 is up about 2 per cent in December so far. 

What mutual funds November data reveal

Nuvama highlighted that in November, mutual funds bought ₹26,400 crore while foreign institutional investors (FIIs) sold ₹30,700 crore in the Indian secondary market.

Equity funds maintain steady cash levels amid strong inflows from retail and HNI investors. As of November-end, mutual funds (pure equity) held ₹1,48,200 crore in cash and equivalents, representing 4.83 per cent of assets—slightly lower than October’s 5 per cent but aligned with historical averages,” said Nuvama.

What mutual funds bought and sold in November

According to Nuvama, in November, mutual funds increased stakes in heavyweights like Reliance Industries, ICICI Bank, and Axis Bank. Meanwhile, mutual funds utilised the MSCI-driven liquidity at November-end to partially exit inclusion names such as HDFC Bank ( ₹11,000 crore), Voltas ( ₹1,400 crore), Oberoi Realty ( ₹1,100 crore) and Alkem ( ₹800 crore).

From the large-cap segment, Zomato, Trent, State Bank of India (SBI), Reliance Industries, and Varun Beverages saw significant buying, while HCL Technologies, HDFC Bank, Cholamandalam Investment and Finance Company, Grasim Industries and Power Finance Corporation witnessed the highest selling in November, Nuvama observed.

In the mid-cap segment, major buying was seen in KEI Industries, NMDC, Bharti Hexacom, Ashok Leyland and Suzlon Energy, while key selling was seen in Voltas, Mphasis, Cummins India, Coforge, and Persistent Systems in November. New India Assurance Company was a complete exit, said Nuvama.

In the small-cap segment, significant buying was seen in Wockhardt, MedPlus Health Services, Welspun Corp, PNB Housing, and MCX, while the highest selling was seen in BSE, CDSL, Cams Services, Happiest Minds, and Sharda Cropchem. New entries included CPCL, India Cements, Optiemus Infra, and Choice International, while Globus Spirits and Gujarat Ambuja Exports were complete exits, according to Nuvama.

In the primary market, the highest deployment by mutual funds was in Zomato’s QIP ( ₹5,600 crore), followed by IPOs of Swiggy ( ₹5,300 crore) and NTPC Green ( ₹4000 crore), according tot he brokerage firm.

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