The Hindu Business Line : DBS Chola Midcap

The roller-coaster ride over the quarter ended June saw a number of mutual funds reshuffle their portfolios. Even as the bellwether indices declined, mid-cap stocks were more conspicuous than ever for the sharp slide witnessed. We take a look at how DBS Chola Midcap managed its portfolio over the quarter.

The fund had about 35 stocks as of June. Industrial capital goods replaced auto ancillaries as the sector with maximum allocation. While the fund went heavy on construction and transportation, the pharma and textile segments underwent some pruning.

The construction sector was a new addition to the portfolio over the said period. Arihant Foundation and Housing, D. S. Kulkarni Developers and Mahindra Gesco Developers were added in May. Sharp declines in Engineers India and Unitech may have prompted the fund to take exposure to these stocks in June. With these five additions, the construction segment accounted for about 8.5 per cent of the fund's total assets.

The fund appeared to adopt a buy-and-hold strategy on stocks from the capital goods space. Voltas, Thermax and Crompton Greaves continued in the portfolio for over six months with occasional profit-booking. Textile stocks lost favour as the fund exited Celebrity Fashions and partially sold holdings in Gokaldas Exports, Alok Industries and Pantaloon Retail.

Allocation to transportation segment received a boost with the entry of Transport Corporation. Holding in Shreyas Shipping also tripled. Transportation stocks received a weight of close to 4 per cent of the asset size in June 2006.

Software underwent some rejig with the exit of Hexaware Technologies. Geodesic Information Systems, Infotech enterprises and Motherson Sumi Systems were accumulated instead.

As pharma bore the brunt of the market decline over the last two months, the fund also appeared to treat the sector with caution. It sold Aventis Pharma in May and also cut holding in Dishman Pharmaceuticals the next month.

Birla Corporation and Madras Cements continued to represent the cement space. The fund however sold about 40 per cent of its holding in Birla Corporation, thus reducing the weight allocated to cement.

Other stocks that made an exit include South Indian Bank and Automotive Axles. Karnataka Bank, Goldiam International and Sintex were bought afresh.

Fund facts: DBS Chola Midcap seeks to invest in stocks primarily in the market capitalisation range of Rs 300 crore to Rs 3,000 crore. The net assets over the quarter declined 22 per cent to Rs 47.54 crore.

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