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Birla Top 100: Cautious on IT

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Suresh Parthasarathy

Birla Top 100 Fund invests at least 65 per cent of its corpus in the top 100 companies, as measured by market capitalisation, and the rest in stocks with strong growth prospects and the potential to outperform the broader indices.

Though its mandate permits it to invest 35 per cent of its assets outside the top 100 stocks, the fund has tended to take a cautious stand and restrict this proportion to ten per cent. Here is a look at how the fund shuffled its portfolio over the past year. The top ten preferred stocks accounted for close to half of the assets and the top three sectors cornered 40 per cent of the portfolio.

The IT sector, among the top three in the portfolio over the past year, seems to have slipped in the fund’s preference and exposure to it was trimmed. With a slowdown in the US markets and continued appreciation of rupee, the fund reduced its holdings in Infosys Technologies and Satyam Computer by half over the past quarter. Exposure to Subex Azure and Tata Consulting Services were also trimmed.

The fund appears to have adopted a cautious stance on petroleum and refining stocks. Over the past few quarters BPCL and HPCL moved out of the portfolio completely. As the share price of Reliance Industries continued to move northwards, the fund preferred to book partial profits in the stock.

Pharma stocks, especially the large-cap ones, have under-performed the broader market substantially. Ranbaxy Laboratory, GlaxoSmithKline Pharma and Nicholas Pharma thus moved out completely. However the fund held on to Cipla and Dishman Pharmaceuticals.

The fund stepped up allocation to capital goods stocks and in the latest portfolio the sector cornered 17 per cent. The fund booked profit partially in BHEL. It added Suzlon Energy, Siemens and Crompton Greaves over the quarter. Assets allocated to the construction sector were almost trebled over the past six months. Larsen and Toubro’s stock price surged after it has declared its last quarter earnings, the used this spike to book profits. GMR Infrastructure and Unitech were added to the latest portfolio.

Birla Top 100 actively churned its holdings in banking stocks over the past year. Both the top private banks ICICI and HDFC Bank under went profit-booking as and when the opportunity arose. Bank of India and State Bank of India were the additions in the sector.

(This article was published in the Business Line print edition dated December 2, 2007)
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