Eternal becomes top pick in mutual fund portfolios in August, bought for Rs 7,200 crore

Eternal (formerly known as Zomato) has become the top pick in the mutual fund portfolios in August, receiving the highest investment of Rs 7,200 crore, beating down some big names such as Infosys, Paytm, HDFC Bank, ICICI Bank, and others, according to a report by Nuvama Institutional Equities.

The report further highlights that the stock was among the top 10 additions by some mutual funds such as Aditya Birla Sun Life Mutual Fund, Axis Mutual Fund, Franklin Templeton Mutual Fund, HSBC Mutual Fund, Invesco Mutual Fund, JM Mutual Fund, Kotak Mutual Fund, Motilal Oswal Mutual Fund, and Tata Mutual Fund. The stock was among the top reductions by SBI Mutual Fund.

Also Read | Infosys, Paytm and BSE among key stocks bought and sold by mutual funds in August. Check full list

According to the report, the equity mutual funds deployed cash meaningfully in August, with overall balances dropping from Rs 1.85 lakh crore (5.46%) in July to Rs 1.76 lakh crore (5.23%), as several AMCs capitalized on block deal opportunities.

Motilal Oswal Mutual Fund led the deployment, investing Rs 6,300 crore, driven by its midcap scheme’s participation in Eternal’s Ant Block, bringing its cash down from Rs 8,200 crore (9.6%) to Rs 2,000 crore (2.2%). This was followed by SBI Mutual Fund and ICICI Prudential Mutual Fund, which deployed Rs 3,100 crore and Rs 1,900 crore, respectively, reflecting a broader shift toward equity allocation.

In contrast, a few schemes added to their cash buffers. Kotak Mutual Fund increased cash by Rs 2,700 crore, followed by Nippon India Mutual Fund with Rs 1,600 crore, and PPFAS Mutual Fund with Rs 1,500 crore, taking its already elevated cash ratio from 20.9% to 21.8%. These additions suggest selective caution amid the broader deployment trend.

In August, mutual funds had around 225 crore shares compared to 202 crore shares in July, witnessing an addition of nearly 23 crore shares.

Also Read | Sectoral & thematic mutual funds inflows drop by over 50% in August. Is investor interest fading?

Among the top 10 stocks bought by mutual funds in August, the other nine were Infosys, HDFC Bank, Kotak Mahindra Bank, Paytm, Bharti Airtel, Axis Bank, ICICI Bank, Tata Communications, and Info Edge (India), which received investment ranging between Rs 1,400 crore to Rs 5,000 crore.

Mutual funds also trimmed their exposure in several stocks, with Maruti Suzuki and Avenue Supermarts witnessing the largest selling by mutual funds of Rs 3,100 crore and Rs 2,900 crore, respectively. Some other top existing mutual funds include NTPC, Sun Pharma Industries, Hindustan Unilever, Hitachi Energy, ONGC, HDFC AMC, L&T, and UltraTech Cement.