The Hindu Business Line : Select band of stocks advances in the bourses

Kolkata, Sept. 24 In a background marked by a general surge in the equity market, a select bunch of stocks handpicked by fund managers seem to be pushing net asset values further, helping a larger number of them reach newer heights.

The band that stands out is chiefly made up of mid-caps, including stocks that are owned by not too many funds. In other words, the list of stocks in question has a sprinkling of a few very special names.

Considering some of the funds figuring in the latest round of winners, some of these entities are Action Construction Equipment (owned by JM Basic, the top one-year performer, with about 80 per cent to its credit as on September 21), Educomp Solutions (Standard Chartered Premier Equity, 72 per cent), Asian Electronics (ABN AMRO Opportunities, 57 per cent) and the like.

Besides, there are a host of stocks that are not part of every portfolio. These include Exide Industries, Shree Renuka Sugar, Madras Cements, Birla Corporation, Sintex Industries. These, and a number of others cutting across sectors, have advanced on the bourses in recent times.

‘Random picture’

Investment circles point out that trends such as these are perhaps more palpable when the general scenario is bullish, a situation that prompts fund managers to spot one-off stocks. As Mr Dhirendra Kumar, head of fund research outfit Value Research, puts it, a number of equity funds have reached stratospheric heights in the recent past. “It is quite a random picture. It is not that mid-cap funds alone are in this group. But clearly it needs to be attributed to the kind of stock-picking done by the fund managers concerned,” he noted.

The reference is to NAVs that lately have been near their 52-week high levels. Sundaram BNP Paribas Capex Opportunities (which had an NAV of Rs 23.68, also its 52-week peak), for instance, has investments in stocks like Lanco Infra and Elecon Engineering — both are names that are not found in too many portfolios. Fund managers contend that it is not quite easy to identify ‘unique’ stocks, ones that can make a critical difference between performance figures recorded by the leaders and those that follow. This, some of them insist, is true for all market conditions.

Says Mr Paritosh V. Thakore, who heads Asian equities at ABN AMRO Asset Management (Asia), actively-managed funds need to be vigilant at all times. “You need to see what someone else may have seen earlier. The price of letting pass a potential winner can be high,” he noted.

Sector fund trend

For all the limited investment universe they operate in, some of the sector-oriented funds have managed to invest a substantial part of their assets in a few special scrips.

Reliance Pharma, the top performer in its category over one year, has 18 per cent in Ankur Drugs (as on August 31), while DSP Merrill Lynch Technology.com has among its top holdings names like Educomp and KLG Systel.

Sector funds, it may be mentioned, are almost nowhere in terms of performance when compared to their more diversified peers. Most sectoral categories — technology excluded — have single-digit scores to offer.

Tech funds have provided 24 per cent or so in the past one year.

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