The Hindu Business Line : Engg, power stocks propel NAVs of equity funds

While power and engineering stocks have been generally moving up, Monday’s session saw frontline companies in both sectors come off their recent highs.

Nilanjan Dey

Kolkata, Oct. 8 Stocks in the power and engineering sectors, both of which have seen surging valuations in recent times, have helped propel net asset values of equity funds to levels where they are at today.

Funds that had NTPC and Tata Power (in the power space) or BHEL, ABB and L&T (among the engineering plays) in their portfolios have gained substantially, thanks to advances that these stocks have recorded in the past few days.

A number of diversified funds have significant allocations to the stocks in question – almost all of these happen to be large-caps, each important enough to attract serious doses of institutional money.

Among the funds that have sizeable investments in such stocks is Sundaram BNP Capex Opportunities. The Fund, which with a 68 per cent score is the third-best performer over a one-year period as on October 5, has substantial exposure to L&T, BHEL and ABB. In fact, together, these constituted around 24 per cent of its net assets (as on September 30).

The BSE 100 and the BSE 200 have produced 42.29 per cent and 41.51 per cent respectively.

Caninfrastructure, which occupies the No 4 slot over the same period, has about 19 per cent invested in engineering/basic sector stocks, including BHEL and L&T. Each accounted for over 5 per cent of its September-end allocations, according to Value Research.

DSP Merrill Lynch TIGER – the acronym stands for The Infrastructure Growth and Economic Restructuring – which follows the Canbank MF-managed fund has a lower 10 per cent-plus allocated to engineering/basic stocks. Its top holdings include Siemens, NTPC and BHEL. While power and engineering stocks have been generally moving up, Monday’s session marked by large-scale unwinding of positions that led to a decline in the indices, saw frontline companies in both sectors come off their recent highs.

ABB and L&T fell by over 2 per cent each, while Siemens, yet another heavyweight, went down by more than 4 per cent. As for the power sector, both Tata Power and NTPC retracted by more than 4 per cent, bucking advancing trend that was evident till Friday.

key players

Some of the key players in the two sectors under consideration here have seen quite a few developments in recent times. NTPC, for instance, has proposed to work out a 50:50 joint venture with BHEL for carrying out engineering procurement and construction activities in the power segment.

Tata Power has informed the exchanges that it has allotted some equity shares to FCCB holders, while L&T has stated that its ECC division in consortium with Outotec of Germany has received an Rs 762-crore order from SAIL.

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