Take This Bridge

Morgan Stanley Asset Management's aggressive restructuring of its equity portfolio in fiscal 1998 has been reflected in its net asset value (NAV), which has shown a jump of over 46 per cent. Its NAV as on March 31, 1998, was Rs 13.04 as compared with Rs 9.15 as on March 31, 1997.

Vinod Sethi, fund manager of the top-ranked closed-ended fund for the last one year believes that the Indian stock market is on the edge of breaking out of a bear phase. In line with this belief the company has started booking profits in high valued sectors such as software and are instead investing in top cyclical stocks.

 

"We are looking at three or four different scenarios for the next one year and are making investments in line with that," said Sethi. MSGF, for instance has been selling its shares in firms such as NIIT and Mastek over the last nine months and instead buying cyclical plays such as Telco, Tata Tea and Larsen & Toubro.

However, despite the trimming, software still accounts for more than 21 per cent of the Rs 1,040-crore corpus. Infosys is the single largest holding valued at Rs 159 crore and for the first time since fiscal 1995 displaced Bharat Heavy Electricals Ltd (BHEL) as the biggest holding of the fund.

Infosys Technologies' contribution to the NAV can be clearly judged by the spectacular performance of the scrip on the bourses during the past one year.

On April 1, 1998, the scrip was quoted at Rs 964 on the Bombay Stock Exchange (BSE). After an 1:1 bonus last year, the share was quoted at Rs 2,925 on March 31, 1999, almost a 600 per cent jump.

On the other hand, the market value of BHEL has witnessed a sharp erosion in the same period, from Rs 114 crore to Rs 71 crore.

Another heavy drag on the assets of the fund has been the Container Corporation scrip. This was mainly due to the government partially divesting its stake in the company in favour of domestic institutions at the rate of Rs 250 per share. Prior to the divestment, the share was last traded at Rs 400-plus levels.