Fund managers in a tizzy as Infosys crashes

Software giant is the second most owned stock in fund managers' portfolios

A 10 per cent crack in shares of IT (information technology) firm Infosys in Friday's trade is likely to impact the investment portfolios of equity schemes. The Bengaluru-based software exporter is the second most-owned counter in equity mutual fund managers' portfolios.

Though in June, fund managers had reduced their exposure to Infosys by 35 basis points, the counter continued to enjoy the second position in their overall holdings. Further, it is the only company from the IT pack to find place among the top 10 picks of fund managers.

Collectively, fund managers have poured Rs 13,700 crore into Infosys, 3.8 per cent of the total equity assets under management as on June 30. In the previous month, their allocation was higher at 4.15 per cent, or Rs 14,335 crore, to Infosys.

Diversified equity schemes which have the highest exposure to Infosys are HDFC Equity Fund (7.55 per cent), UTI Opportunities Fund (7.6  per cent), Reliance Vision Fund (9.63  per cent) and Motilal Oswal MOSt Focused Multicap 35 Fund (7.72  per cent). It will be interesting to see how the net asset value (NAV) of their units are affected. NAVs, generally, are declared late in the evening.

On the BSE, shares of Infosys closed at Rs 1,072, down Rs 103.6 or nine per cent. The counter hit a low of Rs 1,058 intra-day as it slipped 10 per cent before recovering to settle a bit higher at the close.

"The impact of such a steep decline in Infosys would have greatly impacted the equity schemes if other stocks in the holdings had cracked too. A 10 per cent dip is enough to make a dent in performance, but counters like HDFC Bank, Axis Bank, Maruti Suzuki and Tata Motors provided cushion and nearly negated the impact of Infosys," explained the chief investment officer (CIO) of a large fund house.

HDFC Bank, for example, which is the most owned stock in fund managers' holdings, hit a 52-week high today at Rs 1,226, a gain of nearly 2 per cent. Tata Motors was up 1.5 per cent, while other heavyweights like Axis Bank, Maruti and Reliance Industries were up nearly 1 per cent on Friday.

"In the current situation, I see no value in pharma, consumer and IT space. Banks and automobiles look preferred picks," he added.

The category average return of IT-related equity funds is the worst over the last three-year period. Major schemes in this category include ICICI Prudential Technological Fund, Franklin Infotech Fund and DSP BlackRock Technology.com Fund. During the last three months, equity schemes with IT as their theme delivered a paltry return of 0.8 per cent while the key stock indices gained 8.6 per cent.