India Market Buzz: Mutual Funds Beat Foreign Investor Favorites

(Bloomberg) --

• Local funds vs FIIs
• Thematic funds
• Credit rating companies

Good morning, this is Ashutosh Joshi, an equities reporter in Mumbai. Nifty futures suggest a subdued opening this morning as Asian markets trade in a narrow range. The big news today include Tesla’s plans to ship a few thousand cars to India and the release of HSBC‘s preliminary February surveys, offering insight into the economy’s health. Traders tracking weekly charts see the 22,700-22,800 range as a crucial support zone for the Nifty.

Stocks backed by local funds beat foreign investor favorites

A clear trend has emerged over the past year: foreigners selling while local mutual funds buy. But how have these opposing strategies played out? Stocks with high mutual fund ownership have beaten those with high foreign ownership, falling 13% from their September peaks versus 19% for the latter, according to analysts at Goldman Sachs Group Inc. This gap suggests that local fund managers may have a better understanding of local companies’ intricacies, allowing for more informed investment decisions.

Investors in thematic funds face reality as returns fade

Thematic mutual-fund plans have been a rage over the last year, helping money managers get around restrictions on fund launches. However, investors are facing for a harsh reality: buying into popular themes usually often depress returns in the short term. About 80% of the 42 thematic/sectoral funds launched in the past 12 months are trading below their par value, according to data compiled by Bloomberg. This is worrying local fund managers, as the segment has been the main driver of inflows, and in turn, a driver of the more profitable equity assets.

Rating firms to get a boost from NBFC fundraises 

Shares of credit-rating firms have taken a beating in 2025 alongside the market downturn. Still, analysts at IIFL expect revenue growth in the low-to-mid teens for all three listed players in the near term, driven by increased bond issuances and securitization activity among non-bank finance companies. IIFL also expects further interest-rate cuts to support bond sales. However, challenges such as increased competition from global capability centres and automation pose headwinds. The brokerage remains bullish on CARE Ratings and ICRA, but bearish on CRISIL.

Analysts actions:

• Cyient Cut to Add at Mirae Asset Securities; PT 1,575 rupees
• DLF Rated New Buy at Ambit Capital Pvt Ltd; PT 900 rupees
• Tbo Tek Raised to Buy at Axis Capital Limited; PT 1,780 rupees

Three great reads from Bloomberg today:

• Billionaire Agarwal Seeks Partner for India Nuclear Power Plants
• ‘Mar-a-Lago Accord’ Chatter Is Getting Wall Street’s Attention
• Big Take: Private Credit Billionaires Emerge as New Finance Rich

And, finally.. 

The tax breaks in the federal budget were expected to revive the sentiment for consumer staples stocks, but the effect was shortlived. A gauge of these stocks closed lower for the 14th straight session Thursday, as analysts expect the cuts to benefit discretionary spending more than drive broad-based consumption. Also, while sector heavyweights have puled back from their recent highs, they remain expensive, keeping potential buyers on the sidelines.

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