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Post-elections, fund managers have increased exposure to specific sectors and firms. Their picks can help individual investors make informed portfolio choices.

Fund managers have made adjustments to their portfolio to reflect the post-election scenario -a stable government that is perceived to be pro-growth. The experts' picks can help individual investors build their portfolio as well. So, what are they betting on?

Tweaking portfolios Most fund managers insist that a chunk of the portfolio adjustments were made prior to the elections, anticipating a positive outcome.

However, the nature of the outcome has led to additional tweaking in the portfolios. We had started shifting positions to economy sensitive sectors several months ago. However, with this sort of an outcome and, expectations of action from the government, we have increased weightages to some of these sectors. We continue to take a balanced approach, as before, focussing on quality parameters like cash flow and return on equity while picking stocks. However, he admits, his team has undertaken some realignment to take advantage of opportunities that have emerged in sectors that are bound to benefit from an improving domestic scenario. Oil and gas, infrastructure, capital goods, logistics, cement and public sector banks are among the sectors he has added to since the election outcome.

 

Most changes in the fund's equity portfolios were carried out well before the election results. We have been convinced for some time that domestic growth is going to pick up, so we have picked stocks which tend to do well during an economic re vival. Oil and gas, auto mobiles, cement, banking and capital goods are among his top sectoral picks. The big bets Not surprisingly, fund managers are leaning towards sectors that stand to benefit the most from a reforms push and an economic growth. They seem to have taken a particular liking to companies belonging to metals and industrial gases sectors, followed by private banking. Hindustan Zinc, one of the profitable subsidiaries of Anil Agarwal-promoted Vedanta group, has seen a massive ramp-up in mutual fund holdings, mainly on account of impending disinvestment plans for the company. Finance ministry has initiated the process for a fresh valuation of the company, seeking to push through a long-pending sale of the government's residual stake in it. By flagging off this process, the government has signalled its intention to hasten disinvestment in public sector companies. Petronet LNG, the importer of liquefied natural gas, is another stock that was picked up by fund managers last month. It has underperformed the Sensex since 2012 and hit a new low in January. However, going forward, several analysts expect a gradual recovery in its operations.

Interestingly, while funds' holdings in the power generation and distribution segment has seen a slight drop during this period, the holding in Power Grid Corporation of India, the country's largest power transmission utility, has seen the highest jump among individual companies. The company's stock has seen a massive rebound this year after trading low for several years. From a low of `86 last year, it has jumped 65% to `142, possibly because the market now anticipates faster clearances for stranded power projects that will boost power generation and, hence, the company's transmission volumes. Power sector reform is among the government's top priorities. Power Grid enjoys a near-monopoly on India's transmission network and, therefore, is well placed to benefit from any expansion in power generation. Another expected beneficiary of a possible revival in the power sector is SJVN. Fund managers heavily accumulated its shares in the month of May.

In the construction space, Sadbhav Engineering was among equity funds' top picks of the last month. Despite sour business climate, over the past two years, Sadbhav has witnessed strong order inflows, providing healthy earnings visibility to the company. Its strong execution record and large order backlog are attracting the attention of fund managers.

In the banking sector, City Union Bank and IndusInd Bank feature prominently in the list of stocks on fund managers' radar. The sector is likely to benefit the most from an economic turnaround. Among other companies with substantial hike in mutual fund holdings post elections are Motherson Sumi Systems, Bharti Airtel, Yes Bank and Kalpataru Power Transmission.

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