Infosys is the most favourite mutual fund stock – find out the eight others

• Mutual funds are ‘buying the dip’ as Indian stock markets correct, amid bear market concerns and risks due to high inflation.
• Overall, domestic investors have invested $3 for every $4 pulled out by foreign investors.
• Mutual funds invested over ₹25,000 crore in these nine stocks, spread across IT and financials, among others.

Bear market concerns and the risk of inflation leading to a global recession has eroded the capital of many investors in 2022, and mutual funds are not immune to this, either. One in four mutual fund houses were sitting on 5-8% of their total funds without investing, but that could be changing now.

According to data compiled by 5paisa, mutual funds bought over ₹25,000 crore worth of stock in nine companies in May, as markets corrected nearly 6% in the first five months of this year.

By far, the single biggest purchase is Infosys, accounting for more than a fifth of the total purchases in this list. It’s no surprise as Infosys stock has crashed nearly 21% during the time period.


Source: 5paisa, data as on May 31, 2022

The HDFC twins together account for over ₹5,100 crore – still considerably lower than Infosys.

Interestingly, despite the 6% correction in Nifty IT this year, this list comprises four financial stocks and just two from the IT sector.

Here’s how these stocks had performed since the beginning of 2022 till May 31, 2022:


Source: NSE

According to a report by Motilal Oswal, the average price earnings multiple of Nifty is currently at 19, which is lower than the 10-year average PE of 19.4.

Kranthi Bathini, director of equity strategy at WealthMills Securities, says this makes investing in Indian companies an attractive proposition for investors. He added that this is one of the reasons behind mutual funds being prolific investors over the past few months.

“Mutual funds cannot let money in their funds lie idle for a long period of time, otherwise they will underperform. Apart from this, the valuations seem attractive enough now for mutual funds to pour in money,” Bathini told Business Insider India.

Will the boom in DII investments last?

Ambareesh Baliga also agrees that mutual funds have been top buyers during the dip. However, he believes that domestic institutional investors or DII inflows could slow down over the next few months.

“Retail investors have become cautious over the last month or two due to the steep correction in the market, and while they will not sell at a loss, their investment quantum could reduce,” Baliga told Business Insider India.

For context, domestic investors brought in over ₹2.5 lakh crore between October and May 2022 – they invested $3 for every $4 pulled out by foreign investors, making up for some if not all the losses after foreign investors pulled out a record sum away from the Indian bourses.

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