Contra view? Team Prashant Jain dips into purse to buy relatively smaller banking stocks

NEW DELHI: Team of fund managers led by Prashant Jain at HDFC Mutual Fund seems to have a different strategy as far as the banking and financial sector is concerned.

While most of the Street, including their peers at SBI Mutual Fund, is bullish on large private names, HDFC Mutual Fund loaded on relatively smaller names in February, data collated by East India Securities shows.

The money manager bought 20-80 lakh shares of Union Bank Of India, The Federal Bank, Indian Bank, Equitas Small Finance Bank and Bank of Baroda during the month.

Banking stocks have seen a lot of volatility in the last few months and concerns over rising inflation and a consequent interest rate hike. Amid such a scenario most analysts have been confident about the outperformance of large private banks like ICICI Bank and Axis Bank.

A source who is aware of the investment decisions at the fund house said some mid and smallcap funds have bought these names. “The idea was just to make the most of the market crash and pick such stocks at low prices,” the person said.

A spokesperson for HDFC Mutual Fund declined to comment.

The biggest worry for banks seems to be if the rising inflation will dent consumption in the country. “We have not seen aggressive loan growth recently that can cause high stress (in terms of NPA). However, we might see a slower pick-up in credit demand when borrowers weigh the benefit of putting fresh capex because a weak consumption cycle could limit demand,” said MB Mahesh of Kotak Securities.

Among other top buys for the HDFC fund managers were GAIL (India), Ashok Leyland, Zee Entertainment Enterprises, ITC and Gabriel India of which they bought 20-45 lakh shares.


Meanwhile, the fund house sold 10-67 lakh shares of Exide Industries, State Bank of India, Bharat Electronics, United Spirits, Carborundum Universal, Tata Steel and Zomato.

New-age tech stocks, including Zomato, have fallen out of favour with many fund houses and they are now trimming their stakes in them, cutting losses. Most of these stocks are trading down up to 70 per cent from their IPO prices.

Some of the buying and selling could also be because of adjustments in indices that are followed by passive funds.

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