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FE Investor Bureau
New Delhi, Dec 9: The equity funds from Kothari Pioneer continue to maintain an aggressive exposure to the information technology sector even as some of their counterparts from other AMCs have drastically cut investments to the sector and moved to other lucrative counters, especially pharmaceuticals. Although the exposure to the IT sector is marginally down, it is attributed to the reduction in exposure to Satyma Computers. According to the fund managers, the IT sector has done well in the last year and the funds have benefited due to exposure to this particular industry.
``We are still positive regarding the industry's prospects given India's competitive position and will continue to maintain a significant exposure to the industry,'' says the fund managers' commentary. The AMC's premier equity fund, KP Bluechip currently has a 23.77 per cent exposure to the IT sector while Prima and Prima Plus hold 18 per cent and 25 per cent of IT scrips, respectively. On the other hand, two other beneficiaries of thedream run in IT sector, Alliance '95 and Birla Advantage have cut their IT holdings by 20 per cent and 24 per cent, respectively.
Surprisingly, the NAV of KP Bluechip has underperformed its benchmark, BSE Sensex for the first time in recent months. The fund has dropped by 1.83 per cent against a 0.07 per cent fall in the benchmark in November. In the last three months, the fund has however outperformed the index by a huge margin with a mere 7.65 per cent drop in its NAV against a 21.88 per cent fall in BSE Sensex. During five years since inception, the fund has given an annualised return of 17 per cent against a 3 per cent drop in Sensex. The fund was launched in December, 1993.
Bluechip has become bullish on automobiles and auto ancillaries and its holdings have tripled to 16.26 per cent with the addition of Hero Honda and Baja Auto.
The fund has brought down its holding in Satyam Computer by 7,000 shares or down from 9.88 per cent to 5.25 per cent. NIIT has replaced Satyam as the number one holding inBluechip's portfolio. According to the fund manager, one company that is expected to rise the IT wave is NIIT. ``NIIT has diversified revenue stream with income accruing from training (40 per cent), software exports (42 per cent) and multimedia (18 per cent). This reduces the risk inherent in a single revenue stream such as software exports,'' says K N Siva Subramanian. ``The company looks attractively priced when evaluated on various financial parameters,'' he adds.
Other scrips that have elevated to the top holdings bracket include Knoll Pharma, Ranbaxy and BSES. The fund has a 97.48 per cent exposure to equities as on November 30, 1998 with the balance in money market.
The Rs 68 crore Prima Plus has embarked on value investment to pick up potentially good performers at attractive valuations. The fund has added Reliance, MICO and Cummins to its portfolio. Prima Plus, which had sold Cummins recently at higher levels has bought the stock again at a lower price. According to the fund manager, MICO is oneof the strongest auto component companies and remains fundamentally strong despite the absence of investor fancy for auto stocks.
The fund has also brought down its exposure to Satyam from 1.08 lakh shares to 83,000 shares, in Infosys from 25,900 to 18,600 shares and in Mastek from 1.01 lakh to 91,200 shares. According to the fund manager, the trimming was done in IT stocks to limit weightage to individual stocks to control the overall portfolio risk while remaining positive on the prospects of these companies. Prima Plus has generated a negative return of 0.77 per cent against a 1.52 per cent drop in S&P CNX 500.
Prima, which invests in both growth and value stocks, has seen its NAV depreciate by 1.58 per cent against a 1.52 per cent fall in S&P CNX 500. The fund is looking at increasing exposure to MNC pharma stocks, especially the mid-cap ones. The fund has a 11.3 per cent exposure to pharma counters of Pfizer and E Merck.
Satyam Computers is one of the largest holdings in the fund with over 15000shares. Even as other funds from KP have sold a portion of Satyam, the fund manager's commentary appears contrarian in Prima Fund which states that the stock has a relative low PE and holds good appreciation potential.
In the Rs 8.57 crore Infotech fund launched in August this year, returns have been a paltry 0.21 per cent. The fund has added PSI Data and Visual Soft to the portfolio.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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