The Hindu Business Line : Sundaram BNP Paribas Select Midcap

Large-cap stocks have borne the brunt of the steep market corrections. Some mid-cap and small stocks too have lost heavily in the last two months. We take a look at a pure mid-cap fund, how it has re-shuffled its portfolio during the six-month period ended February.

Sundaram BNP Paribas Select Midcap assets have dropped marginally over this period. The fund has a well-spread portfolio. It consists of 80 stocks and the top 10 stocks accounted for 29 per cent of the assets. The fund has increased exposure to sectors such as financial services, fertilisers and chemicals, energy and construction. Sectors out of favour are cement, industrial manufacturing, media, pharma and services. The under-performing IT sector too has moved out of the portfolio.

Exposure to finance sector

With increased asset allocation to the finance sector, the fund has stepped up exposure to Bank of Baroda, Union Bank of India and Max India. The stocks that moved into the portfolio were Canara Bank, Federal Bank and India Infoline while exposure to ING Vysya Bank was reduced.

On the back of a good monsoon and anticipating good earnings from the fertilisers and chemical sector, the fund has increased the weight of the sector in the portfolio by 80 per cent. Exposure to the stocks of Tata Chemicals and Chambal Fertilisers was enhanced substantially. Gujarat Alkalies and Chemicals and Himadri Chemicals were the new additions to the portfolio.

Construction stocks, most sought till some time ago, have undergone re-rating, along with the ongoing market correction. In the past six months, the fund has increased asset allocation to the sector; however the fund was cautious in selecting the stocks. It has pruned exposure to Hindustan Construction and Madhucon Projects.

The weight of the cement sector in the portfolio was reduced over the quarter. Birla Corp, Century Textiles and Orient Paper moved out of the portfolio. Exposure to Madras Cements was trimmed. The fund viewed capital goods cautiously and over the past quarter it pruned exposure to the sector. It reduced holdings in stocks such as ABG Shipyard, Bharat Electronics, Punj Lloyd and Thermax.

Metals continue to be the preferred sector and cornered close to 16 per cent of the assets. As the stocks rallied over the past six months, the fund preferred to reduce holdings in stocks such as Maharashtra Seamless, Monnet Ispat, JSW Steel and Welspun Gujarat Stahl Rohren.

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