ZEE, Equitas SFB, Coforge, City Union Bank: How MF favourite stocks fared in 2023

BSE500 companies with high mutual fund (MF) ownership fared mixed in 2023 so far. Out of 21 such companies, 10 failed to match index return of 9.2 per cent this calendar, 10 others rewarded investors while one stock barely performed in line with the broader market. 

Shares of Cholamandalam Financial Holdings, Equitas Small Finance Bank, Coforge and Can Fin Homes jumped a solid 40-79 per cent in the first eight months of this calendar. A few MF favourites such as City Union Bank Crompton, Greaves Consumer Electricals and V-Mart Retail were hit hard, falling 11-32 per cent in 2023 so far. For study, only those BSE500 companies were picked, where MF holding was at least 25 per cent at the end of June quarter.

Cholamandalam Financial Holdings, where MFs held 25.72 per cent stake, has jumped 78 per cent to Rs 984.40 level on Thursday against December 30 2022's closing price of Rs 551.05.

Equitas Small Finance Bank Ltd jumped to Rs 90.41 level from Rs 58.40 at 2022 end, delivering 54 per cent return. Coforge Ltd and Can Fin Homes Ltd climbed 40-41 per cent each, data compiled from corporate database AceEquity suggests.  Mutual funds owned 27.73 per cent stake in IT firm Coforge and 25.16 per cent stake in the housing finance company Can Fin Homes. Stocks such as Max Financial Services Ltd(up 38 per cent), Carborundum Universal Ltd (30 per cent) and Krishna Institute of Medical Sciences Ltd (29 per cent).

Kalpataru Projects International Ltd, SKF India Ltd and PNC Infratech Ltd gained 15-18 per cent. MFs owned 27-39 per cent stake in these companies. Shares of Zee Entertainment Enterprises delivered a return of 9.31 per cent this calendar, mostly in like with BSE500 return.

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On the flip side, City Union Bank Ltd plunged 32 per cent year-to-date. The MF favourite, where the institutional category held 27.74 per cent stake at June-end, saw its shares falling to Rs 123.40 level from Rs 180.25 level at 2020 end. V-Mart Retail plunged 21.77 per cent, Crompton Greaves Consumer Electricals tanked 10.84 per cent and Orient Electric slipped 9.8 per cent. MCX,  KNR Constructions, ICICI Bank, PVR Inox, The Federal Bank and  Ipca Laboratories delivered positive returns for the year, but lagged the BSE500.

Analysts noted that despite record outflows of foreign portfolio equity investment in 2022, the domestic market was relatively unscathed due to strong  buying by domestic institutional  investors including MFs. Anand Rathi in a strategy noted suggested that the ownership of domestic mutual funds jumped to 19 per cent of the free float market capitalisation from 9 per cent between  2014 and 2023.

"Mutual fund ownership  culture is developing among Indian  households with the number of equity  mutual fund folios jumping from less  than 60 million to over 100 million since September 2019," it noted.

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