After an exceptional bull run at the bourses that saw mutual funds run behind infrastructure and capital goods as a theme, fund houses are now chasing defensive plays such as pharma, oil and gas and select information technology stocks. Mutual funds are also scaling up their exposure to metals and heavy engineering sector.
Analysts say that having seen a trough last year, valuations for pharma companies look attractive. The massive crash in equity markets took a toll on sectoral funds during March as almost all sector funds generated negative returns.
The banking funds were worst hit as high inflation data led to expectations of monetary tightening and affected sentiments.
Even now funds are cutting exposure to financial services, especially commercial banks, which are involved in the forex derivatives tangle. In case of broking companies, choppy markets have taken a toll on their profits, leading to funds being underweight.
With corporate earning figures not so satisfactory and signs of gross domestic product growth moderating, fund houses are shifting their focus to individual stocks with robust growth prospects.
Says Anoop Bhaskar, head-equity at UTI Mutual Fund,