Navs Of 38 Equity Plans Spin Down 17% In July

The net asset value (NAV) of 38 equity open-ended growth schemes witnessed a 1.3-17.3 per cent drop in net asset value (NAV) in July.

The worst-hit were schemes dedicated to the information technology sector. Seven infotech schemes -- SBI IT, Sun F&C Emerging Technologies, IL&FS Ecom, Pioneer ITI Infotech, Birla IT, Alliance New Millennium and Chola Freedom Technology -- reported a 12.6-17.3 per cent range drop in NAV. However, these schemes outperformed the Business Standard IT Index which plunged by 18 per cent during the month.

The volatility in information technology sector stocks was in line with the swings in the global markets. Domestic infotech companies, despite a good volume growth, witnessed a slide in their profit margins owing to pricing pressure.

The diversified equity growth schemes also witnessed a decline in their NAVs. Among the 23 diversified growth schemes, Prudential ICICI Growth reported the largest drop of 11.3 per cent followed by ING Growth Portfolio Scheme with a drop of 10.8 per cent. Reliance Growth Fund, Reliance Vision and Pioneer ITI Prima were the other schemes in the category which reported a drop of over 9 per cent.

In July, the Sensex slipped 9.5 per cent, while the S&P CNX Nifty dipped 10.4 per cent. The broad-based indices such as BSE-500 plunged by 9.9 per cent and BSE-200 declined 9.4 per cent.

An erosion of 23 per cent in the market cap of steel sector and over a 20 per cent drop in the four-wheeler segment triggered the drop in NAV.

Nevertheless, the gain in aluminium (3.3 per cent) and refineries (2 per cent) sectors offset the erosion in the NAV of diversified schemes during the month.

The three equity speciality schemes -- Escorts Opportunity, Pioneer ITI Pharma and UTI Pharma -- had the least erosion in NAV in July.