The sell-off of Infosys shares on Tuesday took a heavy toll on all five technology sector funds, which had large exposures to the Bengaluru-based company. Among the funds, the net asset value (NAV) of Tata Digital India Fund, which had 33 per cent of its assets exposed to Infosys, saw its NAV dip 6.16 per cent on Tuesday.
ICICI Prudential Technology, which had 44 per cent exposure to Infosys, saw its NAV slip 7.28 per cent. For Birla Sun Life Digital Fund, the impact was 5.16 per cent (27 per cent exposure to Infosys), while for SBI Technology Opportunities Fund, the NAV slipped 6.16 per cent (35.69 per cent exposure). Franklin India Technology Fund, which had 25 per cent exposure to Infosys, took a 4.7 per cent dip in its NAV.
According to industry sources, the large exposure of these schemes to a single stock (which is Infosys in this case) is within the regulatory framework. “The sector funds are exempt from the ten per cent limit to a single stock, which equity diversified funds are subjected to,” said a fund manager.
Earlier, fund managers were bullish on Infosys given its sharp discount in valuation terms to its industry peer TCS. Also, change in management following Vishal Sikka's exit had stoked expectations of better performance by the company.
The Infosys stock is widely held by mutual funds, with more than 400 actively- and passively-managed schemes exposed to the company.
The 16.5 per cent crash in the Infosys stock following concerns over corporate governance led to mark-to-market losses of over Rs 6,800 crore for MFs on Tuesday.