Alliance Equity: Hold

Recommendation: Hold

Aarati Krishnan

A HIGH exposure to technology stocks and a high degree of portfolio churning have been the key features of Alliance Equity Fund over the past year.

With the majority of technology stocks trading at low valuations, the fund holds potential for appreciation in the event of a recovery in the equity market, especially technology stocks. The fund is suitable for investors with an above-average appetite for risk.

The changes in the portfolio between June 30 and September show no particular sectoral pattern. Individual holdings appear to have been changed mainly to take advantage of movements in individual stock prices.

New additions: Stocks added to the portfolio during the quarter are Reliance Industries, ITC, Aptech, Citicorp Securities and Pritish Nandy Communications. The fund added 5,05,000 shares of Hindustan Lever to the portfolio. ABB and Cummins are two new additions in the capital goods sector.

Stocks sold out: Cement is one sector to which weightage was entirely cut back during the quarter. Gujarat Ambuja Cement, Indian Shaving Products, Vikas WSP, IPCL, Bayer, Silverline, Cinevista Communications and National Radio were also pruned from the portfolio. Indian pharma stocks Lupin Labs and Ranbaxy were liquidated and so was Global Telesystems.

Holdings enhanced: The fund bought additional shares in a range of infotech companies, including Digital Equipment, HCL Technologies, Mascon Global, NIIT, Satyam Computers and SSI. In the FMCG and pharma sectors, the fund added to its holdings in Nestle India, Glaxo India and Pfizer. Among cyclicals, the fund added to Hindalco, Hero Honda and Punjab Tractors.

Holdings reduced: The fund has partially liquidated holdings in Nalco, HDFC, Infosys, Zee Telefilms, Himachal Futuristic and Valiant Communications.

Sectoral shifts: The changes have resulted in substantial increases in allocations to banks/FIs, capital goods, oil and gas and foods. Despite a number of new additions, the fund's weightage in infotech stocks has remained more or less unchanged at 40 per cent over the quarter. Exposures to media stocks has fallen from 9 per cent to 4 per cent of net assets, while exposure to telecom stocks has also fallen from 22.3 per cent to 16.9 per cent. Exposure to consumer/personal care and pharmaceutical stocks has remained the same over the quarter.

This column tracks recent changes in the top exposures of various mutual funds. The latest available portfolio is compared with that of the preceding month/quarter.