Uti Jettisons Frontline Shares

The Unit Trust of India (UTI) was an aggressive seller in frontline stocks during the year ended June 2002. This is contrast to its earlier strategy of holding on to frontline stocks, while it churned its secondline stocks.

During July 2001-June 2002, the fund cut its holdings in 20 of its top 100 stocks. The top 100 stocks account for 90 per cent of its total equity investments.

Overall, the fund reduced its exposure to 200 scrips, indicating that it had put almost one-third of total number of 634 scrips on the selling list.

These trends are based on UTI's disclosure of equity investments of 58 schemes for which the comparable data is available. Together its equity investment in 58 schemes stood at Rs 17,816 crore as on June 30, 2002, down by Rs 520 crore from the level as on June 30, 2001.

The fund was a heavy seller in Reliance Industries, Hindustan Lever, Infosys Technologies, Mahanagar Telephone Nigam Ltd, State Bank of India, Tata Steel, Satyam Computer, Hero Honda, Nestle, HDFC, Gujarat Ambuja, Grasim, Asian Paints (India) and TVS Motors.

However, it increased its exposure to Reliance Petroleum, Bharat Petroleum Corporation, HPCL, Ranbaxy Laboratories, Cipla, BSES, Zee Telefilms, Mahindra and Mahindra, ACC, Wipro and Indo Gulf Corporation.

Nevertheless the fund's strategy paid off well as its equity investments dipped a modest 2.8 per cent during the year, which is much lower than the 6 per cent erosion in major market indices between July 2001 and June 2002.

A sectoral break-up reveals that the fund reduced its exposure to petrochemicals, cigarettes, personal care products, food products, two wheelers, steel, plastics, chemicals, textiles, domestic appliances during the period, but it increased its exposure to infotech, pharmaceuticals, banks, telecommunication, refineries, power, cement, entertainment, fertiliser, non ferrous metals, paints, shipping and tyres.

Despite the sell-off, Reliance Industries still tops UTI's portfolio, accounting for 10.4 per cent of its total equity investment. Reliance is followed by ITC at 9.7 per cent, Hindustan Lever (6 per cent), Infosys Technologies (5 per cent) and Reliance Petroleum stands fifth at 4 per cent.