But, the bulk of their purchases was in the largecap segment, according to the data revealed by Nuvama Institutional Equities.
Mutual funds heavily bought index heavyweights Housing Development Finance Corporation (HDFC), Reliance Industries (RIL), and Maruti Suzuki India. In value terms, they cumulatively bought shares of these three companies to the tune of Rs 6,000 crore, the brokerage said.
In December, equities fell sharply, with Nifty50 dropping about 4% as COVID concerns in China dampened the market sentiment.
After being net buyers for two straight months, foreign investors turned net sellers in December, and a reflection of this could be seen in the performance of HDFC, RIL and Maruti Suzuki, where FII holdings are quite high.
Shares of HDFC fell 2% month-on-month (MoM) in December, while RIL and Maruti Suzuki shed more than 6% each.
But this correction possibly made these stocks attractive for the domestic mutual funds and saw them flocking into these counters.While MFs raised their holdings in the above-mentioned stocks, they trimmed their holdings in Axis Bank, HCL Technologies, and ICICI Bank.
In value terms, they sold shares of these companies to the tune of Rs 2,730 crore, the brokerage said in its report.
In fact, mutual funds have trimmed their holdings in HCL Technologies and ICICI Bank for three consecutive months.
Shares of HCL Technologies dropped sharply in December by more than 7%, after the company trimmed its revenue growth guidance for the current financial year, citing that higher-than-expected furloughs will affect growth in the second half of the year.
On Thursday, HCL Technologies further trimmed its revenue growth and margin guidance for FY23, despite posting strong numbers for the December quarter. The company expects the March quarter revenue growth to be moderate as it is a seasonally weak one for the software business.
In the midcap segment, stocks in which mutual funds increased holdings were Ajanta Pharma, Jindal Stainless, Max Financial, and Power Finance Corp. While they reduced holdings in Narayana Hrudayalaya, Gujarat Gas, Ramco Cements, and Voltas.
In the smallcap segment, mutual funds increased holdings in Sapphire Foods, Kfin Technologies, and GMM Pfaudler. They reduced holdings in Amara Raja Batteries, Praj Industries, and Eris Lifesciences.
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