Software stocks, however, account for a chunk of mutual fund portfolios, says Cris-Risc study
Frontline software stocks were not the favourites of fund mangers in March 2003, according to a popularity index of equity sectors created by Cris-Risc, a Crisil subsidiary.
The index captures the propensity of a fund manager to invest in a company/industry.
The popularity score is computed as a product of the average holding of funds and the percentage of funds invested in the sector.
This is then standardised by dividing each score by the highest score in that sector, and multiplying by 100 to arrive at the popularity index.
While infotech stocks such as Satyam Computer Services, Wipro, Digital GlobalSoft and Infosys Technologies lost ground, public sector and bank stocks gained popularity among the fund managers.
Hindustan Petroleum Corporation, Bharat Heavy Electricals, Bharat Petroleum Corporation and State Bank of India got higher ratings.
Two wheeler giants Hero Honda and Bajaj Auto lost in the popularity stakes as the sector is facing a pressure on profit margins.
Cement stocks such as ACC and Larsen & Toubro, fast moving consumer goods giant Hindustan Lever and cigarettes giant ITC have also been on the losing side.
The fund managers are also averse to pharmaceuticals sector as reflected in a decline in the rankings of Ranbaxy and Dr Reddys Laboratories in the popularity index.
The two Tata group companies, Tata Engineering and Tata Steel, has found favour with fund managers, with both the stocks gaining in popularity.
Though individual software stocks have lost favour with fund managers, a reading of the portfolio of 105 equity schemes shows that the sector still tops the list, aggregating over 10 per cent of the corpus of individual schemes.
Bank stocks were the major gainers in the index, having moved up from 82.58 per cent in February 2003 to 100 per cent in March 2003. This implies that each and every one of the 105 fund managers polled invested in the sector.
Fundmen continued to heavily invest in sectors such as pharmaceuticals, refineries, steel, petrochemicals, electrical equipment, aluminium, paints and automobiles (four wheelers).
There has, however, been a sharp decline in investments in entertainment, cement, power, telecommunication and automobile (2/3 wheelers).
Crisil says the construction of the index will ensure that the data is comparable across time periods.
For the purpose of the index, Cris-Risc took into account open-ended equity and balance schemes with growth options and the individual scheme
