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MFs shuffle pack as mkts remain jittery

Bet on metals,health & tech; shun FMCG,banking.

Uncertainty looming over the equity markets following higher inflation and fears of hike in interest rates has made equity fund managers shuffle portfolio in favour of safer haven sectors as well as in stocks of blue-chip companies.

In the month of December,mutual fund industry increased allocation to sectors such as metals,health care and technology stocks while moving away from volatile sectors such as engineering,banking and fast moving consumer goods (FMCG).

Financial sector despite having the highest exposure of over 17% of total assets,saw a fall in its overall market share in equity portfolio partly due to fall in share price and partly due to sale of shares by the fund manager. Energy sector had the second largest allocation among sectors of 15% followed by the technology sector.

Gopal Agrawal,head equity at Mirae Mutual Fund says,“With expectation of higher commodity prices,exposure to the metal sector has been increased. Also with the worst behind for telecommunication stocks,some mutual funds are lapping up their stocks.” “In the current tight liquidity scenario industry is once again looking at companies which are generating high cash and are less leveraged. So it is obvious that industry are hiking their exposure in many big large-cap companies once again,” added Agrawal.

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According to data provided by Valueresearch,many fund managers bought additional shares of blue-chip companies like Infosys Technologies,Reliance Industries,ICICI Bank,HDFC Bank and Tata Consultancy Services in the month of December. On the other hand they are also moving away from stocks such as Zee Entertainment,ONGC,Tata Motors,Bharti Airtel and LIC Housing Finance. Market participants say that,with increased market volatility and poor market sentiments post scam in the mid-cap space,many are reducing exposure to such stocks.

First published on: 22-01-2011 at 23:05 IST
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