Fund Favourites: Top Stocks Held by Midcap Mutual Fund Schemes in July

ETMarkets has compiled a list of the most widely held stocks by midcap mutual fund schemes as of July 2024. A total of 12 stocks are held by more than 18 different midcap mutual fund schemes, reflecting their popularity among fund managers. Notably, 9 of these stocks have delivered returns of over 25% so far in CY24, including Dixon Technologies (India), Cummins India, Voltas, and The Phoenix Mills (Data Source: ACE MF, ACE Equity).

Understanding Midcap Mutual Funds

Midcap mutual funds invest at least 65% of their assets in companies ranked between 101 and 250 by market capitalization, as per the classification provided by the Association of Mutual Funds in India (AMFI). These companies, often seen as emerging stars, have the potential to grow into large-cap entities in the future. During a bull market, midcap funds can sometimes outperform large-cap or diversified equity funds due to their growth potential and market positioning.

Key Stocks and Their Performance

Dixon Technologies (India)
- Fund Holdings: Held by 18 midcap mutual fund schemes as of July 2024.
- Market Value: Rs 5,619 crore.
- Performance in CY24: Dixon Technologies has been a stellar performer, surging by 102% in CY24. The stock rose from Rs 6,561 on December 31, 2023, to Rs 13,264 in July 2024, reflecting strong growth and positive investor sentiment.
Cummins India
- Fund Holdings: Held by 21 midcap mutual fund schemes.
- Market Value: Rs 5,981 crore.
- Performance in CY24: The stock has delivered impressive returns of 95%, climbing from Rs 1,964 at the end of 2023 to Rs 3,821 in July 2024. This growth is attributed to the company’s robust performance and expanding market presence.
Voltas
- Fund Holdings: Held by 24 schemes.
- Market Value: Rs 5,144 crore.
- Performance in CY24: Voltas has gained 73% in CY24, moving from Rs 978 to Rs 1,690. The company’s performance is driven by strong demand in the consumer durables sector and effective cost management strategies.
The Phoenix Mills
- Fund Holdings: Held by 18 schemes.
- Market Value: Rs 3,373 crore.
- Performance in CY24: The Phoenix Mills has surged 59% this year, with its stock price rising from Rs 2,244 to Rs 3,566. The company has benefited from the revival in retail real estate and strong consumer footfalls.
Persistent Systems
- Fund Holdings: Held by 21 schemes.
- Market Value: Rs 8,661 crore.
- Performance in CY24: Persistent Systems has seen a 32% increase in its stock price, from Rs 3,694 to Rs 4,879. The IT services company has capitalized on digital transformation trends and strong demand for technology solutions.
Bharat Forge
- Fund Holdings: Held by 19 schemes.
- Market Value: Rs 4,789 crore.
- Performance in CY24: The stock is up 31% this year, climbing from Rs 1,239 to Rs 1,621. Bharat Forge has benefited from its diversification into defense and electric vehicle components.
Schaeffler India
- Fund Holdings: Held by 20 schemes.
- Market Value: Rs 4,057 crore.
- Performance in CY24: Schaeffler India’s stock has grown by 28%, rising from Rs 3,202 to Rs 4,096. The company has seen strong demand for its automotive and industrial products.
The Federal Bank
- Fund Holdings: Held by 24 schemes.
- Market Value: Rs 8,241 crore.
- Performance in CY24: The stock has gained 28%, increasing from Rs 156 to Rs 200. Federal Bank’s growth is driven by its expanding loan book and improved asset quality.
Max Healthcare Institute
- Fund Holdings: Held by 18 schemes.
- Market Value: Rs 5,416 crore.
- Performance in CY24: The stock has surged 24%, moving from Rs 688 to Rs 853. The growth is attributed to strong performance in healthcare services and an increase in patient volumes.
Max Financial Services
- Fund Holdings: Held by 19 schemes.
- Market Value: Rs 5,836 crore.
- Performance in CY24: Max Financial Services has seen a modest 11% rise in its stock price, from Rs 955 to Rs 1,062. The company continues to show steady growth in the life insurance sector.
Mphasis
- Fund Holdings: Held by 21 schemes.
- Market Value: Rs 5,261 crore.
- Performance in CY24: The stock has increased by 9%, reaching Rs 3,000 from Rs 2,740. Mphasis has maintained growth momentum in the IT services sector, particularly in the banking and financial services domain.

Insights and Implications

The above stocks, predominantly held by midcap mutual fund schemes, reflect the fund managers’ confidence in their potential for high growth and future expansion. Companies like Dixon Technologies and Cummins India, with triple-digit growth, exemplify how midcaps can outperform the broader market when chosen carefully. On the other hand, stocks like Max Financial Services and Mphasis, which showed modest growth, provide a mix of stability and moderate returns.

Midcap funds are particularly attractive to investors who are looking for a balance between growth and risk. Given that these companies are positioned to grow into larger entities, they offer substantial upside potential, particularly in a bullish market environment. The ability of these funds to identify and hold onto high-performing stocks is crucial for generating above-average returns.

Conclusion

The stocks most widely held by midcap mutual fund schemes have shown impressive returns in CY24, with several outperforming the broader market. With a mix of high-growth potential and relatively lower risk compared to small-cap stocks, midcaps remain a favorite among investors looking to capitalize on India’s growth story. As these companies continue to expand and evolve, they offer promising opportunities for both short-term gains and long-term growth.