NEW DELHI: Calendar 2019 belonged to a handful of largecap stocks.
Domestic fund managers, who made the right choices, generated twice as much return as their peers during an otherwise challenging year.
What proved to be a common link among the top five performing schemes were two stocks – HDFC Bank and ICICI Bank. Bajaj Finance also had healthy weightage in most of the top performing funds.
Shares of ICICI Bank surged 51 per cent for the year, while those of HDFC Bank gained 20 per cent. Bajaj Finance with 59 per cent return was the top performer in the Sensex pack for the year.
Largecap equity funds delivered an average of 10 per cent return for the year against a 15 per cent expansion in BSE Sensex.
Among the top five equity funds of 2019, IIFL Focused Equity Fund delivered a strong 28 per cent return. The two banking stocks accounted for nearly 20 per cent of weightage in the fund’s portfolio.
ICICI Bank with a 10.15 per cent weightage was another major holding in the portfolio at the end of November. The fund’s holding in the bank stock was actually at a three-year high during the year, shows Value Research data.
HDFC Bank was the second biggest stock in the scheme with a 9.25 per cent weightage. Axis Bank (7.55 per cent) and Bajaj Finance (4.50 per cent) were other big holdings in the portfolio. Axis Bank rose 19 per cent for the year.
Another scheme, Axis BlueChip Fund, saw 20 per cent jump in NAV. HDFC Bank was its biggest holding with a 9.05 per cent weightage. At 7.62 per cent holding, ICICI Bank was its third biggest holding. The fund also had Reliance Industries (7.69 per cent), Kotak Mahindra Bank (7.38 per cent) and Bajaj Finance (7.37 per cent) among its portfolio stocks. Reliance Industries and Kotak Mahindra Bank climbed 35 per cent each during the year.
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DSP Focus Fund’s NAV rose 19 per cent for the year. ICICI Bank and HDFC Bank were the two biggest holdings of this fund with 10.66 per cent and 10.41 per cent weightage, respectively.
ICICI Bank’s holding in this fund was also at a three-year high as of November 30. Bajaj Finance and RIL were the two other major holdings.
BNP Paribas Large Cap Fund surged 18 per cent year to date. ICICI Bank and HDFC Bank were the two biggest holdings in the portfolio with of 9.41 per cent and 8.52 per cent weightage, respectively.
The same story repeated in Motilal Oswal Focused 25 Fund. HDFC Bank had a 10.65 per cent weightage in the portfolio while ICICI Bank had 9.63 per cent.
“We expect private sector banks to benefit from lower cost of funds, better asset quality and consolidation of the industry. Hence, despite subdued economic activity, we except large private banks to deliver better growth and improve their return ratios,” said Vikaas Scahdeva, CEO at Emkay Investment Advisors.
Gautam Duggad, Head of Research for Institutional Equities at Motilal Oswal Financial Services, said ICICI Bank appears firmly positioned to deliver healthy sustainable growth, supported by continued investments in technology and expansion of its digital offerings.
“The bank has navigated well through a challenging macro environment with limited exposure to the newly-surfaced stressed names. It has, in fact, built one of the highest provisioning coverages in the banking sector. ICICI Bank remains one of our top ideas from the BFSI space,” he said.
YES Securities named HDFC Bank among the three banking stocks that may do well in 2020.
Only largecap and multicap schemes were considered for this analysis.
Source: Economic Times