New Delhi, July 15 -- Asian Paints, which was once a stock market darling for its steady performance and stellar returns, has faded into the background as competitive intensity in the paints sector has increased, with the entry of deep-pocketed players like Birla and JSW threatening its market dominance.

Yet, the latest spate of buying by mutual funds-who are generally long-term investors-worth Rs.10,500 crore in Asian Paints stock last month, raises the question of whether institutional investors are seeing signs of a turnaround for the paint maker.

It must be noted that a major chunk of this buying was driven by mutual funds lapping up the stake sold by Reliance Industries in Asian Paints. Most analysts view these inflows as being mad...