India’s largest foreign investor cuts stake in Reliance Industries, Adani Ports; lap up 3 other Nifty stocks

EuroPacific Growth Fund, India’s biggest foreign portfolio investor (FPI) with roughly Rs 90,000 crore exposure to local stocks, reduced stake in billionaire Mukesh Ambani’s Reliance Industries (RIL) and Gautam Adani’s Adani Ports during the September quarter.

Data available with the stock exchanges showed the overseas investor sold 12.53 lakh shares of RIL during the quarter gone by, bringing it down to 3.10 per cent from 3.12 per cent at the end of June.

The stake reduction came after the RIL stock gained nearly 90 per cent since the beginning of this financial year to trade at Rs 2,028 on October 26.

The fund also brought down its holding in Adani Ports to 1.42 per cent from 1.77 per cent earlier. Shares of Adani Ports and Enterprises have advanced 48 per cent so far this financial year. Domestic equity benchmarks Sensex and Nifty have climbed over 40 per cent during this period.

Domestic brokerages are positive on RIL and Adani Ports and see up to 20 per cent upside in them. Angel Broking has fixed a price target of Rs 2,543 for RIL, while JM Financial sees the stock at Rs 2,313-2,358. Axis Capital has an ‘add’ rating on Adani Ports with a price target of Rs 400.

EuroPacific Growth also lightened its positions in private lenders Axis Bank (to 1.90 per cent from 2.09 per cent) and in ICICI Bank (from 2.10 per cent to 1.41 per cent). Shares of the two banks have advanced over 30 per cent over the past seven months. However, the fund hiked stake in HDFC Bank, the country’s biggest private sector lender by assets, by 45 basis points to 3.82 per cent and in insurer HDFC Life Insurance by 39 basis points to 3.05 per cent.

Motilal Oswal is positive on HDFC Bank with a target price of Rs 1,400. It believes the bank’s earnings can grow 19 per cent annually over FY20-23.

The FPI held 30.75 lakh shares, or 1.02 per cent stake, in the county’s biggest carmaker Maruti Suzuki as of September 30. It was not among the key shareholders of the company in the previous two quarters. At the end of December last year, EuroPacific Growth Fund held 1.01 per cent stake in the auto major. Maruti Suzuki shares have risen 66 per cent to Rs 7,054 from Rs 4,243 on April 1.

The fund also kept its holdings unchanged in Kotak Mahindra Bank and UPL. Shares of HDFC Life, Kotak Mahindra Bank, HDFC Bank and UPL are up between 20 per cent and 50 per cent since the start of FY21.

“The auto sector should do well, and this is well reflected in the monthly sales numbers. Earnings commentaries of major auto players are also looking promising this festive season,” said Paras Bothra, President of Equity Research, Ashika Stock Broking.