New Delhi, March 4: The heroes turned zeroes in just one year. Investors in technology-dedicated mutual funds have lost over Rs 9,000 crore during the past 12 months, which means a massive erosion of an average 70 per cent in their market capitalisation across the board. A steep fall in information technology (IT), media and telecom shares has reduced the market capitalisation of 22 equity-dedicated mutual funds to Rs 2,965 crore from Rs 12,254 crore a year ago.Investors had pumped in around Rs 2,100 crore in January-February last year in five high profile initial public offerings (IPOs) of mutual funds. The value of these investments today stand at just Rs 1,052 crore, down almost 50 per cent. The fall from the highs in net asset values (NAV) in March last is even higher at Rs 1,644 crore or 65 per cent.
The worst hit has been SBI Magnum Equity Fund, whose NAV has eroded by over 90 per cent to Rs 11.1 from a high of Rs 111.85 in March last year. The NAVs of KP Infotech of Kothari Pioneer and SBI Magnum IT too have been wiped off by over 83 per cent. KP Infotech's NAV peaked at Rs 112 in March last year and today it stands at Rs 17.98.
Interestingly, despite a steep fall in markets and NAVs, there has not been any major redemption pressure in the equity funds so far. However, the investors' worries are on the rise as the NAVs have been consistently falling and the technology stocks too are not showing any signs of a turnaround. A slight redemption pressure in these equity funds can make things even more difficult for the asset management companies as the asset values are already so low that any selling pressure in these stocks can wipe away NAVs further.
Indian bourses touched their historic high in first week of March last year with ICE stocks ruling the roost. A year later, these stocks have nosedived, thus leaving the investors high and dry.
It was not long ago when the money was pouring into the equity-dedicated funds who were supposed to be a safer bet as compared to the secondary market.
Dhirender Kumar of Value Research, which tracks the mutual fund sector, says that technology stocks can still test the investor's patience and can give more anxious moments. Investors should get out of the technology funds and instead look for diversified mutual funds to see themselves through.
"Market is a wheel and all the variables look firmly in place for a broad-based rally and we now have low interest rates, low valuations, rejuvenation of sentiment, the government's privatisation initiative and a growth-oriented Budget to drive the market northwards," Mr Kumar said.
Copyright © 2001 Indian Express Newspapers (Bombay) Ltd.
