IT, core sector stocks on mutual fund radar

IT and infrastructure stocks are on the investment radar of domestic mutual funds. Top fund houses "� Reliance Mutual, HSBC MF, SBI MF, Standard Chartered MF and Prudential ICICI "� have, in the recent weeks, bought into companies in the two sectors. And, they have done that by reducing their equity exposure to auto and a few FMCG counters since October.

Following the bull run on the bourses, analysts expect top IT stocks such as Infosys, Satyam, MphasiS BFL, TCS and recently listed Info Edge, and infrastructure scrips like IVRCL, Alstom Projects, JP Associates and Tata Power to outperform the index in the short-to-medium term.

"Despite a few hiccups on issues such as human resources and operating margins, top IT stocks still give better yields.

Conventionally, the funds are bullish on IT scrips. Last quarter, IT bluechips Infosys, TCS came out with excellent results, and that gave a boost to the ongoing bull run. Now, by putting more funds into IT, the funds want to strengthen their portfolios," said Harit Shah, IT analyst at Angel Broking.

Along with TCS and Infosys, MphasiS BFL has been one scrip in which mutual funds have invested during the period.

"Most investors are relying on MphasiS's integration with EDS (India), which could result in strong offshore revenues for the company. Once the legalities are completed, benefits will reflect in the balance sheet. So, the funds are eyeing good returns from these investments," he said.

Reliance Equity Opportunities Fund recently bought 12.7 lakh shares of the company, while infusing funds into Infosys, Areva T&D and Bharat Earth Movers.

It also shed its investments in Cadila, India Cements, Hero Honda and ITC. The ITC counter, too, saw HSBC Equity Fund sell its 11 lakh shares, along with Tata Motors and Hero Honda.

Prudential ICICI Fund bought 22 lakh shares of Indian Hotels and 10 lakh shares of Tata Power, as it sold some of its holdings in banking stocks such as Bank of Baroda (3.9 lakh shares), Punjab National Bank (2.9 lakh shares) and ICICI Bank (two lakh shares). The fund also invested in Prithvi Info, buying 1.8 lakh shares. Sundaram Mutual Fund, too, bought 3.85 lakh shares of the scrip.

Besides, three IT scrips "� Info Edge, Megasoft and Saksoft "� and several infrastructure and allied sector stocks "� Punj Loyd, Simplex, Siemens, Mahindra Gesco, BHEL, Hindalco and SAIL "� are the ones in which funds have been net buyers over the past few days.

BSE IT index was the biggest gainer last week, rising 4.2 per cent to 5156, against 2.04 per cent growth in the Sensex and 2.52 per cent in the Nifty.

In tandem, IT funds were the week's top performer, generating 3.09 per cent returns, while auto (2.62 per cent), banking (1.23 per cent), FMCG (1.11 per cent) and pharma (0.94 per cent) rallied behind.