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Old-economy stocks back in reckoning

Nilanjan Dey

WORDS, words, words. Last week, there was a surfeit of that from the stock markets, and equity funds had little to show for themselves save some plain adjustments in their portfolios. Going by indications, this week may not be any different.

By now, it is clear that some of the old-economy counters are again coming to the fore, and that funds are selectively buying into sectors such as pharma and consumer durables. Stocks such as Cipla and ITC have come in for acquisition by funds in the rec ent past.

In the FMCG sector, Hindustan Lever deserves special mention, the recent hammering of the stock (following a somewhat humble financial performance) notwithstanding. MFs are taking pains to point out that they would stick to HLL. No fund, it seems, would question the company's prospects over the long-term.

Tech stocks, however, are still leading the buy and sell lists. Even here, funds are modifying their portfolios by adding new tech counters. There have been transactions in counters such as NIIT, SSI, Satyam and Digital. On the other hand, some funds hav e exited Zee and Ramco.

In contrast, the debt market was active, and is expected to remain so in the next few days. The call money scenario, in recent times, has gone through some mutations, and funds have tried their best to ride the changes.

Some hardening has been noticed in prices of Government securities, especially in the wake of the positive sentiments emanating from the success of SBI's India Millennium Deposit scheme. This is likely to stand debt funds in good stead.

No feel-good factor can, however, hold back the dangers that constantly worry participants in the fixed-income market. Increase in global petro prices and a stressed-out rupee could wreck fortunes here.

Debt fund managers, presumably, would try to take advantage of short-term interest rate movements, if any. Liquid funds - the type that hope to attract temporary surplus money - would try to remain well invested in short-maturity securities. Dividends fr om liquid funds are much in vogue, and a few of them are expected to declare dividends in the next few days.

December could prove to be newsy from the point of view of initiatives taken by the Association of Mutual Funds in India (AMFI). Real estate MFs are expected to figure in the next AMFI board meeting. The association has been studying `real estate investm ent trusts' that exist in the US market. AMFI, incidentally, has revamped its Web site, www.amfiindia.com, to incorporate more user-friendly features. Dissemination of NAVs would henceforth be prompter.

Zurich India MF's move to distribute units through the trading platform of National Stock Exchange makes sense, as NSE has a wide reach. MF investors, one is sure, would like other funds to follow suit.Meanwhile, as transaction trends for the month (up t o November 23) indicate, gross purchases of equity funds trailed gross sales by Rs 315.07 crore. However, gross purchases of debt funds were more than gross sales by Rs 519.73 crore.

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