MFs cut holdings in 14 PSU stocks in February; seven of them see double-digit fall

Mutual funds reduced exposure in 14 public sector stocks in February, of which, seven of them witnessed a double-digit correction. Many of these stocks gave multibagger returns through 2023.

Indian Railway Finance Corporation

The number of mutual fund schemes holding the stock reduced to 34 in February from 37 in January. This stock, which gave 184% returns in 2023, has corrected 29% in over a month. From a quarterly point of view too, mutual funds have been consistently reducing their stake in the last five quarters.

SJVN

This is another multibagger PSU major where MFs reduced their holdings last month. The number of MF schemes holding the stock came down sharply to 21 in February from 33 in the preceding month. The stock has corrected over 23% since February, but it has given 127% returns in 2023. Between March to December 2023, MFs had steadily increased their holdings in the power producer.

NBCC India

The stock that corrected nearly 15% since February, saw MF ownership fall to 21 schemes from 28 schemes in January. This is another PSU stock that gave multibagger returns of 110% in 2023.

IRCON International

This is the fourth multibagger PSU stock to see a reduction in MF holding last month. The stock gave a staggering 186% returns in 2023, but has corrected 22% since February. Interestingly MF holding in the company had increased sharply in the December quarter from the September quarter.

Goldilocks period over?

After the stellar run in 2023, some amount of correction was bound to happen and, therefore, analysts are not perturbed by this downfall in PSU stocks.

Kshitiz Mahajan of Complete Circle Wealth believes that there is froth in small and micro-cap segments and specific sectors like defense, railways, and banks within the PSU space.

“Investors should exercise caution, considering valuation metrics and expected earnings rather than following a herd mentality,” he said.

On the contrary, two PSU sectors that individual investors should probably focus on according to Hemant Sood of Findoc are defence and banking.

“These 2 sectors have capabilities to outshine in the coming year with the support of government and initiatives like ‘make in India’ would act as a catalyst in terms of growth and overall expansion,” he said.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)