The portfolio manager of the equity fund, S Naganath, told The Financial Express that the decision to keep liquid cash was prompted by the prevailing political uncertainty following the defeat of the BJP government at the Centre.

Naganath, however, pointed out that the extra cash would be reinvested in the current month as there are several bargain buys available now in sectors like pharmaceuticals, fast moving consumer goods, software and chemicals. The fund's corpus at the end of April 1999 was around Rs 46 crore.

Interestingly, the fund's exposure to IT stocks has declined to around 25 per cent in end-April from 36.41 per cent on March 31, 1999. This is partly due to selling of holdings and partly the result of lower valuations of software stocks towards theend of last month, fund sources disclosed.

Naganath revealed that he had reduced holdings of BFL Software in April as doubts were being raised about the company's ability to sustain earnings in the event of loss of Compaq business (its main client) to Digital. Discounting this development, the market price of BFL Software slipped from Rs 1077 on March 19 to below Rs 800 level in April. "We booked partial profits in this counter because we had picked this scrip around Rs 220 ," he added.

About investments which have turned sour, Naganath could recall the case of Secals which was picked up for its turnaround potential and the stake acquisition by DLJ Alliance of the US. "The turnaround story has not yet come true and this has led to a sharp drop in its price. However, its weight in our total assets is insignificant," he explained.

The improved investor sentiment for mutual funds after the Union budget has benefited DSP-ML like it has Birla MF, Prudential ICICI MF and Kothari Pioneer in the form of higherinflows. "We received over Rs 125 crore into our three schemes in the last two months, bulk of which has come into the income fund," Naganath pointed out.

DSP-ML has assets worth Rs 550 crore under its management, of which nearly Rs 500 crore is the corpus of its income fund. Since inception the equity fund has recorded growth of 99 per cent. In this period, the BSE Sensex fell by 2 per cent.