The Hindu Business Line : `IT stocks turn out of favour for mid-cap funds'

For mid-cap funds, infotech stocks seem to be going out of favour. A review of portfolios of select mid-cap funds underlines how fund managers have wholly exited certain stocks last month, many of which are in IT space.

VisualSoft Technologies, NIIT, Financial Technologies, Dynamatic Technologies and Usha Martin Infotech are some of the counters that have seen the exit of mid-cap funds. While a number of stocks from manufacturing and services sectors are also included in the list, the presence of a large number of IT names seems to make the trend quite discernible.

The review, conducted by Sharekhan, is on the basis of end-June portfolios of 17 funds, including such well-known ones as Franklin India Prima, HDFC Capital Builder, Reliance Growth and Birla Mid-cap.

Other (non-IT) stocks from which such complete exits have been noticed include Orchid Chemicals, Shaw Wallace, Allahaband Bank, Asian Paints and NRB Bearings.

Taking all equity funds into account, a select set of new stocks has made it to the top of their portfolios. These include companies that have recently made IPOs - Prime Focus, Allcargo Global Logistics and Deccan Aviation. Besides, miscellaneous other companies such as Essar Oil, Pritish Nandy Communication and VIP Industries. Also, considering all equity funds, there have been complete exits from a few counters. These include Indian Seamless, KPIT Cummins and Morarjee Realties.

Some of the top new stocks in portfolios of mid-cap funds represent sectors such as pharmaceuticals (GlaxoSmithKline Pharma and Glenmark Pharma), banking (Bank of India), oil (Castrol and Hindustan Oil Exploration) and IT (Aztec Software and Polaris Software Lab).

Some of the more popular stocks held by mid-cap funds are from sectors such as steel (Jindal Steel, JSW Steel), textiles (Raymond, Mahavir Spinning), auto/ancillaries (Ashok Leyland, Cummins) etc. Some of the top additions to their existing holdings are India Cements, Cadila Heathcare, Dhampur Sugar, Esab, Finolex Cables and Gujarat Heavy Chemicals.