Equity Funds Hit Hard, Nav Drops 4-17% In 4 Sessions

Equity funds, already hit hard due to the prevailing bearish sentiment in equity markets, have further slid in past four trading sessions. The funds have reported a drop in the range of 4-17 per cent in net asset value (NAV) during the past four trading sessions. As many as 32 schemes, among 88 equity schemes, have underperformed to major market indices that have dropped by 10 per cent in past four trading session since Tuesday (September 11). The news of terrorist attacks in the US and now the hovering war clouds -- triggered the selling pressure at the bourses, have dented the net asset value (NAV) of almost all the equity-oriented funds.

Prem Khatri, vice-president (marketing), Pioneer ITI Mutual Fund opines, "Investors need to keep in mind, that in situations like this the markets move due to sentiments and rumours. If one takes a moment to think about the whole situation with a calm mind, it would be clear that the current fall is a typical knee-jerk reaction and has nothing to do with the fundamentals."

He further said, "The domestic economy is largely dependent on domestic consumption, and in a weak global economic scenario, India is one of the few countries expected to register positive growth. Our forex reserves are adequate to stave off any run on the rupee. While the global oil prices have a direct impact on our economy, the assurances given by the Oil Producing and Exporting Countries (Opec) should allay any concerns in this regard."

Meanwhile, it would not be a surprise that the major loser among the lot were the sector-specific funds with a large exposure in infotech stocks.

Alliance New Millennium fund was the worst hit among the lot which saw an erosion of 17 per cent in its NAV during the period. Its NAV now stands at Rs 2.87. The fund, has an exposure of over 65 per cent in infotech scrips and has given heavy weightage to Infosys Technologies, HCL Technologies and Satyam Computer Services.

Kothari Pioneer Infotech fund follows (second worst hit) with a drop of 15.1 per cent to an NAV of Rs 10.04. The fund's heavy exposure to Infosys Technologies, which accounts for 22 per cent of its corpus, dented its NAV in a major way. Infosys Technologies saw an erosion of over 17 per cent in its share value during the same period.

Prudential ICICI Technology fund was the third worst hit with a drop of 14.95 per cent in NAV. Its NAV as on September 14 stood at Rs 2.39.

UTI Software fund with an NAV drop of 14.58 per cent and Kotak Mahindra Mutual fund's K-Tech fund with a 14.18 per cent drop were the other two funds among the top five losers.