Mutual funds betting big on recently listed and new-age companies

August witnessed a surge in mutual fund investments in newly listed and new-age companies. Three such stocks—Ola Electric, FirstCry, and Zomato—made it to the top five most bought stocks by mutual funds (MFs) during the month.

Ola Electric, which listed on August 9th, was the second most popular choice among MFs, with investors pouring over Rs 2,740 crore into the stock. Newly listed FirstCry also garnered significant attention, with MFs purchasing 40 million shares worth Rs 2,550 crore. Zomato ranked fourth in the list, attracting Rs 2,500 crore in MF investments.

While these new-age companies were favored, the traditional banking sector saw mixed fortunes. Axis Bank led the top buy list, with MFs investing Rs 3,120 crore. However, its larger peer, HDFC Bank, faced a significant outflow of Rs 8,370 crore from MFs. The bank, which has struggled to perform in recent years, saw several fund houses reducing their allocations after consistently buying for six months. Quant MF even completely exited the stock in August, having previously made substantial investments.

Other stocks that were sold by MFs in August included Bharti Airtel, Zydus Lifesciences, Indus Towers, Coal India, and Dixon Technologies. Notably, Adani Enterprises was completely exited by fund houses, while Adani Energy Solutions saw significant buying.

In total, MFs invested over Rs 35,600 crore in domestic equities during August. This was in contrast to foreign institutional investors (FIIs), who sold Rs 2,700 crore in the Indian secondary market.

The shift towards new-age companies and the exodus from HDFC Bank highlight the evolving preferences of mutual fund investors. As the market landscape continues to change, it will be interesting to see how these trends unfold in the coming months.