Which stocks did top Mutual Funds buy in February? Let’s find out!

Buying the dip is one of the most preferred investing ideas that most investors adopt in their financial journey. The idea is not only for retail investors, but mutual fund managers also buy the dip - when an opportunity comes along. 

The equity market is down by nearly 6% in 2023, and some stocks have fallen 20% to 30% in the last one year or so. It gives an opportunity to mutual fund managers to buy good shares at lower prices. For mutual funds, it is crucial to have inflows from retail investors to buy the dip. 

So let us first look at whether there have been enough inflows. Second, what mutual funds bought and sold last month? 

Net inflows in mutual funds

The latest AMFI data suggest that net inflows into mutual funds stood at Rs 9575.17 crore in February 2023. The amount is lower than January's Rs 11,373.21 crore (one reason could be the fewer days in February, people investing on the 30th may not have invested). 

Anyways, it is a positive track record of inflows for the past five consecutive months. The last time the market reported an outflow was in September 2022. Based on the above numbers, we can say that mutual fund managers can take fresh positions and also buy the dip. Let us look at what they have bought and sold recently. 

What mutual funds have bought and sold in February?

Looking at the overall picture, mutual funds have used the dip to buy stocks in the auto, hotel, and entertainment sectors. On the other hand, they have reduced exposure to stocks in the banking and insurance sectors. Let us look at this in more detail.

The favourite buy

Looking at the table below, one can easily conclude that one of the top picks by mutual funds in February was Reliance Industries. Out of the 10 mutual funds mentioned below, 4 have increased their stake in Reliance Industries. 

In the last one month, the stock has corrected by 7%. It has fallen 12% YTD, which makes it an excellent buy in the large-cap space. Given the strong financials and attractive valuation, mutual funds have grabbed the opportunity to buy more shares.

Buying seen in the auto sector

In the auto sector, buying was seen in stock companies like Maruti Suzuki, Apollo Tyres, Bajaj Auto, and Motherson Sumi Wiring. Maruti's stock has fallen over 7% in the last six months, even after reporting good quarterly numbers. 

Apollo Tyres has fallen 6% in the last month which gives an excellent opportunity for fund managers to buy this stock. The other two companies have also fallen within the same time frame.

Selling pressure in Banking stocks

If you look at the table, some buying was seen in the banking stocks. But these were mostly stocks that have been heavily beaten up in the last one year. 

The overall sentiment was negative around banking stocks, as mutual funds sold major banking stocks. For example, the SBI mutual fund trimmed stakes in the State Bank of India and Axis Bank. Axis MF sold ICICI Bank. Selling was also seen in NBFCs - Max Financial Services, Bajaj Finance, and Bank of Baroda. 

Fresh buying 

Looking at the table, we can say that fresh buying happened across sectors. Let us look at some stocks and how much they have fallen recently, which may have prompted the fund managers to take a position in these companies 

• PVR has fallen 6% in the last one year
• Tata Power has fallen over 10% in the last one year
• Bandhan Bank has lost more than one-fourth of its value in the same period
• Avenue Supermart has fallen 21% in the last one year

Conclusion

Based on the above data, we can say that mutual funds have increased their stakes in good companies, which have fallen marginally in recent months. Also, they have taken a fresh position in companies that have fallen significantly in the last year.

For retail investors, it is essential to note that buying the dip should only be implemented when you are sure the company's fundamentals are strong. You should not catch a falling knife.

This is not investment advice. Investments in the securities market are subject to market risk, read all the related documents carefully before investing. Past performance is not indicative of future returns.