The Hindu Business Line : HDFC Core & Satellite

Between February and May 2006, the assets of HDFC Core & Satellite increased by Rs 200 crore to Rs 737 crore. The top five sectors constitute 60 per cent of the assets, as do the top ten holdings.

The fund pruned holdings in capital goods, software, bank and non-ferrous metals. Instead, it accumulated stocks in the petroleum, cement, ferrous metal and pharmaceutical sectors. Exposure to consumer non-durable stocks increased by 40 per cent over the last three months. Frontline IT player Infosys replaced BHEL in the top slot and accounted for 7 per cent of the portfolio.

The capital goods sector saw partial profit-booking on the back of a sharp rally over the last quarter. Bharati Shipyard underwent major pruning, as the fund sold almost 65 per cent of its holding in the company. While exposure to BHEL was reduced, Crompton Greaves was accumulated.

Despite the market upswing over the past year, under-performance of the banking sector may have prompted the fund to trim its holdings to 50 per cent of allocation to the segment as of February. Andhra Bank and Punjab National Bank moved out completely. Public sector major State Bank of India was the lone representative from the banking space.

In the auto sector, Tata Motors witnessed partial profit taking. The sector accounted for 5.2 per cent of the total assets. In auto ancillaries, exposure to stocks such as Amtek Auto, Balkrishna Industries and Motherson Sumi System increased. The fund partially sold shares of Rico Auto.

The fund may have made a well-timed move in the non-ferrous sector. The sharp run up in the Hindustan Zinc stock prompted the fund to partially book profits. Exposure to Hindalco was instead propped up.

In the petroleum space, Reliance Industries was added afresh. The stock constituted 5.2 per cent of the total portfolio. The fund's new-found interest in cement stocks may have come about on the back of increased construction and real estate activity and consequent firming up of cement prices.

The fund, however, cautiously took exposure to just one stock — India Cements — over the said period. Expansion in asset size may have prompted HDFC Core & Satellite to add more stocks. Cipla, Sesa Goa and Godawari Power & Ispat were some of the newcomers in the portfolio.

Fund facts: The fund, launched in September 2004, is managed by Mr Dhawal Mehta.

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