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Select mutuals dump Infosys to pare losses

BS Markets Bureau

Infosys Technologies has been dumped by mutual funds during March in their frantic bid to cut losses and pare exposure to the stock.

According to figures culled from Iris, the research unit, the funds, which were selling Infosys shares included Birla Mutual and Kotak Mahindra Mutual and DSP Merrill Lynch.

Among these, the lion's share of the dumping was done by Birla Mutual, whose three schemes -- Birla Equity Plan, IT Fund and Birla Advantage Fund -- have collectively jettisoned more than 94,000 shares during the month and the schemes' exposures in the stock range between 1.7 to 2.8 per cent.

According to the findings by Iris, at its peak, Birla Advantage had an exposure of over 60 per cent to infotech shares and 24 per cent to Infosys. The other two schemes' holdings were in excess of 12 per cent of their portfolios.

Others which have sold off Infosys shares are K30, K Balanced and DSPML Tech.com, though their holdings of the stock still are between 5 to 9 per cent of their respective portfolios.

However, a number of other mutual funds have ended up buying Infosys - with the fund managers apparently feeling that the stock is a good bargain at these levels. As per the Iris data, more than 25,000 shares of Infosys were bought during the month by Kothari MF, DSPML and IL&FS MF, among others. The bulk of the purchases have been made by Kothari Pioneer's various schemes, amounting to nearly 14,000 shares. These companies still hold substantial chunks of Infosys shares with the scrip making up an average of 8 per cent of their portfolios.

During March, the price of the Infosys scrip eroded by more than Rs 2,000 from Rs 6,258.40 on February 28 to Rs 4,095 on April 2. In April itself, the scrip price has gone down by Rs 1,245 so far hitting a 20-month low of Rs 2,850 on April 12.

The steep erosion in the value of the scrip has been a major reason for the funds pulling out the stock - in fact it was a two-way process, according to fund managers. With the price dipping, fund managers started off-loading in large chunks which led to further erosion and so on.

There were some fence-sitters also among the funds who neither added to their Infosys holdings nor sold off any - such as Kothari Internet Opportunities Fund (16.18 per cent), K-Tech Scheme (12.31 per cent), Kothari Infotech (21.47 per cent) and Kothari Taxshield (6.14 per cent).

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