Mutual funds hike exposure to Reliance Industries; lower valuations attractive

NEW DELHI: Shares of Mukesh Ambani-led Reliance Industries may have traded weak on the bourses in the recent months, but mutual funds have enhanced their exposure to the stock, attracted by its lower valuation.

More than 200 mutual fund schemes purchased fresh RIL ( Reliance Industries Ltd) shares, worth an estimated Rs 1,500 crore at current value, during the last quarter.

In contrast, about 100 schemes sold RIL shares from their portfolio during the quarter ended September 30. These shares are worth about Rs 350 crore at the current market price.

The MF schemes having purchased fresh RIL shares during the quarter also included those from Anil Ambani-led group's Reliance MF, the country's biggest fund house.

Interestingly, the RIL stock fell sharply by about 11 per cent during the July-September 2011 quarter.

In the past one year, RIL stock has dipped by over 20 per cent and hit a 52-week low of Rs 713.55 on August 26, 2011 and is currently trading near Rs 884 level.

But, RIL figures prominently on the portfolios of various MF schemes, by virtue of being the country's most valued firm and its high weightage on key market indices including Sensex.

MFs collect money from various investors, including the retail participants, for their different schemes and then invests the same in stocks, bonds and other securities.

One fund house generally runs a number of schemes for different market segments.

RIL is the second most-held stock after ICICI Bank by all the fund houses together. It figures on the portfolios of more than 300 MF schemes and all the funds together held RIL shares worth about Rs 6,800 crore at the end of September.

An analysis of quarterly portfolio disclosures of various funds shows that as many as 210 schemes together bought more than 1.7 crore fresh shares of RIL during the last quarter.

On the other hand, about 41 lakh RIL shares were sold by a total of 97 MF schemes during the quarter.

Only two schemes, belonging to Franklin Templton MF, had no change in their RIL holding during the quarter.

Those having sold RIL shares included only one Reliance MF scheme, while about a dozen schemes of the fund house purchased fresh RIL shares during the quarter.

Besides, the shares were also bought by various schemes of ICICI Pru, UTI, HDFC, Birla Sunlife and Franklin Templeton.

Interestingly, Reliance MF had lowered its exposure to RIL in the last fiscal.

On its part, RIL continued to avoid Reliance MF for its investment needs during the fiscal ended March 31, 2011, even as it parked money in a host of schemes from other funds.

A host of other funds had cut their RIL exposure during the last fiscal and the stock lost its position as the top- held stock for overall mutual fund space to ICICI Bank.

Source: EconomicTimes