Infosys stock fall impacts equity schemes

Firm is the second most sought after by equity fund managers, with 4% of assets finding their way into its shares

A seven per cent fall in the share price of information technology (IT) giant Infosys has impacted several equity mutual fund schemes in the past week.

The company is the second most sought investment avenue by equity fund managers. On an average, four per cent of all equity assets or Rs 13,700 crore find their way into its shares.

The counter on the stock exchanges came under sudden pressure after a 52-week high of Rs 1,278, after the company said it expected short-term quarterly bumps in some key sectors that it had not anticipated at the beginning of the year.

Large-cap and multi-cap schemes with a focus on blue-chip counters have higher exposure to Infosys. Due to which, their performance got dampened. For instance, the average category return of large-cap schemes in the past week was only 0.15 per cent. In multi-cap funds, the weekly category average return was 0.6 per cent. This is in sharp contrast with the returns these categories generated in the past month, at a little over four per cent.

Mid-cap and small-cap equity schemes scored better in the past week, at 1.04 per cent and 1.4 per cent, respectively.

Fund managers, from the start of the year, have not been so bullish on IT stocks. Barring Infosys, no other IT counter was in their top 10 picks. “We have been betting on Vishal Sikka (the chief executive) and he has done phenomenally well after he came on Infosys’ board. In the short term, there are some hiccups for IT in general. But, we continue to hold Infosys as our top pick and would not be adding more of it in our portfolios for the time being,”  said the chief investment officer of a fund house, who wished not to be named.

Known equity schemes like HDFC Equity Fund, HDFC Top 200, Birla Sun Life Frontline Equity Fund, ICICI Prudential Focused Bluechip Fund, Franklin India Bluechip, UTI Opportunities, Reliance Vision and Axis Equity Fund have Infosys as their largest holding. Put together, these selective schemes hold nearly 40 million shares of Infosys.

Barring HDFC Equity Fund, the country's largest with assets worth Rs 15,200 crore, no other scheme could generate a trailing returns of more than one per cent in the week ending Thursday. The weekly trailing return from other schemes ranged between a negative  0.3 per cent and 0.75 per cent in positive territory.