Mutual funds play a crucial role in shaping market trends, often identifying stocks that are worth holding for the long term. By closely monitoring mutual funds’ stock picks, retail investors can gain insights into companies with strong fundamentals and consistent performance.
In this article, we’ll take a deep dive into the top 10 stocks that are most widely held across active mutual fund schemes in India, as per the data from July 31, 2024. These are the companies that mutual funds trust with substantial investments, and they serve as a solid benchmark for investors looking to build or rebalance their portfolios.
Top 10 Mutual Funds’ Favorite Stocks in India: A Snapshot for Investors
Why Should You Care About Mutual Funds’ Favorite Stocks?
Mutual funds, especially those managed by experienced professionals, have the resources and expertise to thoroughly analyze companies before making investment decisions. These funds invest in stocks based on thorough research, focusing on long-term growth, financial strength, and market dominance.
By understanding which stocks are the most widely held by mutual funds, you can get a sense of which companies are likely to perform well in the long term and why these stocks are favourites among fund managers.
Now, let’s look at the top 10 mutual funds’ favourite stocks in India.
1. HDFC Bank
- Market Value: ₹1,54,842 crore
- Number of Funds Holding: 572 funds
HDFC Bank is a perennial favourite among mutual funds, given its consistent financial performance and dominant position in the Indian banking sector. With robust asset quality, a wide retail banking network, and prudent risk management practices, it’s no wonder why over 570 funds hold shares in this giant.
2. ICICI Bank
- Market Value: ₹1,37,997 crore
- Number of Funds Holding: 491 funds
ICICI Bank, another banking heavyweight, comes in a close second. Its aggressive digital push, strong loan growth, and healthy balance sheet make it a compelling investment choice for fund managers looking for both growth and stability.
3. Infosys
- Market Value: ₹91,362 crore
- Number of Funds Holding: 439 funds
Infosys is a global IT services leader, and its stock is widely held by mutual funds for its innovation, client relationships, and ability to capture new digital trends like AI, cloud computing, and automation. With steady revenue growth, Infosys remains a staple in many such portfolios.
4. Reliance Industries
- Market Value: ₹88,674 crore
- Number of Funds Holding: 501 funds
Reliance Industries is not just an energy behemoth but also a key player in telecom (Jio) and retail, which positions it for long-term growth. Mutual funds appreciate the diversified revenue streams and the company’s strategic moves into future industries like green energy.
5. Bharti Airtel
- Market Value: ₹63,988 crore
- Number of Funds Holding: 431 funds
As India’s second-largest telecom operator, Bharti Airtel is a key player in the ongoing digital revolution. Its investments in 5G, broadband, and mobile services have made it a mutual fund favourite, offering growth potential in an expanding market.
6. Larsen & Toubro (L&T)
- Market Value: ₹63,489 crore
- Number of Funds Holding: 464 funds
L&T is a powerhouse in India’s infrastructure and engineering sectors. Mutual funds are drawn to its robust order book, diversified business operations, and leadership in the construction and defense sectors. L&T’s role in nation-building projects makes it a solid investment choice.
7. Axis Bank
- Market Value: ₹57,106 crore
- Number of Funds Holding: 412 funds
Known for its rapid growth in retail banking and strong corporate lending, Axis Bank has become a favourite stock among mutual funds. Its focus on digital banking and improving asset quality are key factors that contribute to its strong presence in fund portfolios.
8. SBI (State Bank of India)
- Market Value: ₹57,027 crore
- Number of Funds Holding: 431 funds
The largest public-sector bank in India, SBI continues to maintain a significant mutual fund following due to its sheer size, government backing, and robust branch network. SBI’s presence in diverse financial services makes it an attractive investment for mutual funds.
9. Maruti Suzuki India
- Market Value: ₹44,432 crore
- Number of Funds Holding: 348 funds
As India’s largest car manufacturer, Maruti Suzuki dominates the domestic automotive market. Mutual funds are bullish on its leadership in the small car segment, along with new electric vehicle initiatives that could drive future growth.
10. NTPC (National Thermal Power Corporation)
- Market Value: ₹44,598 crore
- Number of Funds Holding: 368 funds
NTPC is a leading player in India’s power generation sector, and its focus on expanding into renewable energy has attracted significant mutual fund investment. Stable earnings and growth potential in the green energy space make NTPC an appealing choice for long-term investors.
Key Insights for Investors
1. Dominance of the Banking Sector:
With HDFC Bank, ICICI Bank, Axis Bank, and SBI Bank all making the list, it’s clear that mutual funds have a strong preference for banking stocks. These companies benefit from India's growing economy and the increasing demand for credit, making them attractive for both growth and stability.
2. IT and Telecom Stocks:
Infosys and Bharti Airtel represent two sectors that are driving India’s digital transformation. These companies are critical to India’s future, and their long-term growth prospects make them appealing to mutual funds.3. Diversified Conglomerates:
Reliance Industries and L&T are both well-diversified companies with strong positions in key sectors such as energy, telecom, retail, and infrastructure, which provide mutual funds with exposure to multiple industries in a single investment.Final Thoughts: What Should You Do?
Investing in the same stocks as mutual funds can be a smart strategy for individual investors. These stocks are backed by in-depth research and represent some of the strongest companies in their respective sectors. However, it’s important to diversify your investments and align your portfolio with your risk tolerance and financial goals.
By paying attention to which stocks mutual funds favour, you can gain valuable insights and potentially ride the wave of institutional success. Whether you’re a seasoned investor or just starting, understanding these trends can help guide your investment decisions.
Happy investing!
