Around 18 diversified funds have outperformed the Sensex, gaining in the region of 6.86-11.15 per cent since November 17. The sharp rise in net asset values of these funds also reflects the fact that they have low exposure to technology stocks, according to a fund analyst.

In fact, technology stocks have seen sharp erosion in their values and some mutual funds have already started churning their tech-heavy portfolios, fund managers said.

Explaining the reason for the appreciation in the diversified equity funds, a fund manager of a leading mutual fund said, ``Old economy stocks have been gaining for the past one month. Market expectation on the disinvestment front has also driven up many of these stocks. Stocks like Tisco, Telco, HLL, VSNL, MTNL, ACC and Gujarat Ambuja have seen sharp spurt in their prices. Sectors like telecom, steel and aluminium are gaining.'' Punters have been shifting focus to cement stocks as there has been a steep hike in output prices. The industry prospects have also improved. Mergers and acquisition and open offers are also aiding the rally in old economy stocks.

The fund manager said that the impressive gain in diversified equity funds during the past one monthis purely NAV driven. ``These funds are yet to attract any fresh investment inflows as one month is too short a period to attract investor attention.''The current buoyancy in old economy stocks is also because worldover there has been warning from technology companies that the current rate of growth may not be maintained.

``That's why you are now encountering an interesting trend: when Dow Jones is gaining, Nasdaq is falling,'' the fund manager pointed out.After the battering of tech stocks, many investors have turned cautious on this sector and are diverting money into more stable sectors. Global mutual fund industry is now facing a huge redemption pressure. In India, funds are sitting on huge cash and are adopting a wait and watch policy. Many Indian funds are keeping liquid cash in order to face such redemption pressures.

The top performers among the 60 diversified equity fund gainers include KP Prima (11.15 per cent), Boinanza Exclusive (10.63), UTI Equity Tax Saving Plan-2000 (10.33) and UTI PEF (9.92) and Master Plus '91 (9.21).