The fund has progressively reduced its holding in the software sector from 41 per cent in June to 34 per cent in September. The exposure was down to 23 per cent in October this year. On the other hand, the fund has hiked its exposure to the pharmaceutical sector from a mere 9.3 per cent in June, 1998 to in 27.3 per cent in October. The number of pharma scrips has also gone up from 3 to 10 in the same period. While the fund has marginally reduced exposure to Smithkline Beecham Pharma, it has increased holding in Pfizer and Wyeth Lederle. The fund has added Abbot Laboratories, Burroughs Wellcome, Novartis, German Remedies, E-Merck, Glaxo and Parke-Davis to its portfolio in October.

``We felt that some of thestock valuations in the IT sector were expensive and we were looking for alternative opportunities. Hence, the increased exposure to the pharma sector,'' said Bharat Shah, chief investment officer, Birla Capital International. ``There is a great potential for pharma business especially MNC companies. Once issues like IPR are resolved, many of the MNC companies will introduce new products which will bring growth. Currently, the pahrma business in India is only a fraction of the world industry and can be gauged from the fact that companies like Pfizer and E-Merck spend more on their R&D than the size of the industry in India.

Hence, the size of our country offers immense potential,'' he added. Birla Advantage was one of the first funds to invest aggressively in the infotech sector and register handsome gains amidst the bearish sentiment prevailing on the bourses. As on October 31, 1998, Birla Advantage has posted a one-year return of 23.4 per cent. The fund has a current NAV of Rs 15.32 with a corpus of Rs95 crore.

``Some of the software scrips have been facing resistance at their current price level and have moved in a narrow band in the past few months as perception has gathered ground that they are overpriced. Hence, it makes sense to exit or cut holdings in few scrips and look for alternative investment opportunities like pharma,'' says an analyst. Between June and October, Birla Advantage has brought down its holding in Infosys from 43,000 shares to 28,200, from 65,400 shares to 11,200 in Wipro and from 73,000 shares to 52,000 in Satyam Computer. In fact, the fund's holding in Satyam had gone upto 94,000 shares in September.

But while the fund has reduced its exposure to these stocks, it has increased its holding in NIIT from 27,100 shares in June to 30,300 in October. It has also added the scrips of Software Solution (28,500) and Visualsoft (42,100) to its portfolio. The fund is thus tapping the middle-rung scrips in the IT sector, which have the potential to generate high returns. Software Solution,for one, has shot up from Rs 191 in June this year to the current level of Rs 567 on the Mumbai Stock Exchange.``Visualsoft has a unique approach as they provide small, innovative solutions. Their Y2K solution has done pretty well and already sold more than 4 lakh packages,'' said Shah.

Some of the other funds have also brought down their exposure to the IT sector. For instance, Alliance '95, the balanced fund from Alliance Capital, cut its exposure to the IT sector by half - from 38 per cent to 19.6 per cent between March and September, 1998. Alliance '95 has been a major beneficiary of the boom in the IT sector with a one-year return of 41 per cent as on October 31, 1998. In the case of Kothari Pioneer's Prima Plus, the fund managers sold Wipro and Tata Infotech in October since the high price of these shares had made them relatively less attractive.