The Hindu Business Line : <I>PruICICI Discovery Fund</I><br> Auto added, banks and petro trimmed

PruICICI Discovery Fund aims to invest in a well-diversified portfolio of value stocks, which will yield a combination of dividend income and capital appreciation. Value stocks are those that have attractive valuations in relation to earnings or book value.

We take a look at how the fund's portfolio changed between June and September 2006. In the same period assets under management grew from Rs 964 crore to Rs 1,209 crore.

Favoured Sectors: During this quarter banking, oil and gas, pharma, software and the transport segments were favoured and the asset allocation to these sectors was enhanced. Auto was the lone sector added to the portfolio.

The fund reduced the exposure in both the top PSU banks State Bank of India and Punjab National Bank. Bank of Baroda was added afresh, while Andhra Bank was accumulated.

The oil and gas sector was represented by the lone stock ONGC, holdings of which tripled during the period. In the pharma space, PruICICI Discovery appears to bet on mid-cap stocks rather than the large-caps. Cadila Healthcare and IPCA Laboratories retained their place while Aventis Pharma was added. The fund stepped up exposure to Novartis India and FDC.

Software stocks underwent a re-rating on the back of some good results from frontline companies. The fund invested in the second-rung IT stock Patni Computers. Hardware stock HCL Infosystem was also added.

Container Corporation of India, representing the transport sector, was among the few stocks that surpassed the May peak. That did not deter the fund from accumulating more of the stock. GE Shipping was the new entrant from the shipping sector.

Maruti Udyog was the lone stock to move in from the auto sector, cornering 2.2 per cent of the portfolio.

Sectors Churn: Auto ancillaries' exposure was trimmed and holdings in Kesoram Industries and India Nippon Electrical were pruned. Exide Industries was another stock that the fund cut exposure to, its holding brought down to one-third of the original level.

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