Mumbai, Sept. 27: The Unit Trust of India (UTI) today sold eight lakh Hindustan Lever (HLL) shares in a Rs 14-crore block deal at an average price of around Rs 175 each.
The shares went to Life Insurance Corporation (LIC) in what brokers dubbed as a routine transaction. However, there were some who read more into the move given that Lever is considered a blue-chip stock in the market.
A small band of analysts feel the fast moving consumer goods industry, reeling under the impact of a drought that scorched a large swathe of rural India, will take time to overcome the strain on its bottomline. Against that backdrop, Lever could lose appeal.
Mutual fund watchers reckon UTI’s sale is in sync with market sentiment. “It has to reduce exposure in stocks that may not do well in the medium term,” they added.
Many have pointed out that UTI has been selling other heavyweights to realign its portfolio. It is reported to have sold 55 lakh shares of Reliance Petroleum last month alone, apart from 25 lakh shares of Reliance. In spite of this, UTI remains one of the largest institutional investors in the group, with 30 crore shares of RPL and 6.50 crore shares of Reliance Industries. The merger between Reliance and Reliance Petroleum will bring about a realignment of the holding.
Brokers concede that it has been UTI’s strategy to sell stocks of public sector companies, in tune with the market mood. “This, however, cannot be seen as distress sales but savvy funds management,” said dealers. “It is more focussed now than before,” they added.
While UTI has said it will consider offloading strategic investments in companies it has promoted, analysts are of the opinion that it may wait for the markets to recover so that it can squeeze out the best bargain. While, senior UTI officials have claimed they could consider selling shares in UTI Bank, the mutual fund major has betrayed no urgency to do so at this stage.
The UTI Bank stock was one of UTI’s major buys in August. It also acquired shares of Tisco, while selling Balaji Telefilms.
Soon after the government announced its plan to bridge the gap in UTI’s assured return plans and its flagship scheme. US-64, many thought it would go slow on sale of blue chips.