Heavy selling of PSU Holdings by fund managers ahead of election results

 Mutual funds sold off their investments in several Public sector holdings (PSU)  in the month of May, ahead of the election results. A total of 9 PSU s were included in the list of 30 most sold stocks. The total redemption amount came to ₹9570 crores, and included stocks of Bharat Electronics, Punjab national Bank, GAIL etc.

According to a report from Nuvama Alternative & Quantitative Research, Canara Bank topped the list of stocks that fund managers sold the most in May, with an estimated withdrawal of Rs 2,270 crores.

HDFC Mutual Fund and Quant Mutual Fund were among the leading sellers at the fund house level. Stocks sold by Quant MF included PNB, Bharat Electronics, GAIL, and Hindustan Copper. While, HDFC MF sold its top five holdings, all of them being PSUs.

Many PSU stocks have performed well in recent years, with some experiencing over a 100% increase in value over the last year. With the optimistic exit poll results, the BSE PSU index surged by 7.7 percent on June 3 but plummeted nearly 16 percent the following day due to the post-election result sell-off. 

A lot of fund managers and market experts anticipate a change in the market cycle, with 'quality' stocks predicted to outperform 'value' stocks.Quality shares are stocks of companies with solid financials, high growth potential, and a sturdy business model. Stocks that are considered value stocks are trading at a lower price than their intrinsic or book value.
PSU stocks are typically categorized as value stocks.