The percentage share of investments made by 36 mutual funds (MF) in the telecom sector currently stands lowest, at least for the first half of the current fiscal 2002-03. The percentage share of these 36 funds in the overall basket of diversifed funds has dropped down to 1.58 per cent in the month of September 2002 as compared to 2.46 in the month of August and 2.02 in July 2002.
Kotak Mahindra MFs head, equity funds, Vetri Subramaniam said, There are some or other issues in the entire sector. Basically, the three biggies hold a big share Videsh Sanchar Nigam Ltd (VSNL), MTNL and Bharti Tele and all these three scrips have some or the other problem.
Another fund manager said, In the case of VSNL, the worries are falling revenues and competition from other players; in MTNLs case there is the BSNL merger possibility and in the case of Bharti, they have their own issues.
Shares of MTNL, last week, hit a 9-year low while that of VSNL on October 22 touched an all-time low. Shares of VSNL hit a low of Rs 97.10 on The Stock Exchange, Mumbai (BSE).
MFs who have reduced their holdings substantially in the telecom sector in the quarter to September are Alliance Capital Tax Relief from 6.10 per cent in the month of June 2002 to 4.80 per cent in September, IL&FS Growth from 4.81 per cent to 4.09 per cent, Kotak Mahindras K-30 from 4.32 per cent to 3.12 per cent and Zurich India equity from 5.70 per cent to nil in the month of September.
However, most diversified funds increased their stake in the banking and finance sector. The average holding in terms of percentage by diversified sectors rose to 9.79 per cent in the month of September 2002 as against 8.62 in August, 7.60 per cent in July, 7.53 per cent in the month of June and 7.41 per cent in May.
Along with investments in banking and finance sectors, MFs have again started betting on information technology stocks.
The average investment in IT stocks rose to 16.21 per cent in September as against 14.88 per cent in August and 13.08 in July 2002.
The dwindling confidence in the equity market is quite evident in the last few months on the count that the percentage of cash holding by MFs is steadily showing a rise.
Amongst the diversified funds which hold big chunks of cash holding are, Reliance Vision with a cash holding of 35.06 per cent in the month of September as against 22.66 per cent in the month of June 2002, Kotaks K-30 from a cash holding of 8.57 per cent in June to 25.51 per cent in September, ING Growth from 6.63 per cent to 26.56 per cent and IDBI Principal equity from 15.22 per cent in June to 19.64 per cent in the month of September.