Morgan Stanley Growth: Hold

Recommendation: Hold

Aarati Krishnan

GIVEN the fairly steep discount in the market price to the current net asset value (NAV), investors in the Morgan Stanley Growth Fund can stay with the fund for now.

Fresh investments need not be contemplated in the fund because of lack of liquidity at NAV-related prices. The performance in 2000 is not bad when viewed in the perspective of its size. However, a smaller fund with a focussed portfolio may be better able to capitalise on a market rally, if it materialises.

Stocks added: The fund has used beaten down valuations to step up its pharma holdings substantially in the April-September period. Novartis, Parke Davis, Pfizer, Glenmark Pharma, Aurobindo Pharma, Hoechst Marion Roussell and Shantha Biotechnics were the notable additions. Novartis now figures among the top 25 holdings. The fund bought a few consumer goods stocks as well, with Nestle, P&G, and Britannia being the major additions. PSU oil companies, BPCL and HPCL and Reliance Industries also entered the portfolio. Reliance and HPCL now figure among the top 25.

Stock sold out: While there is a clear sectoral pattern in the new entrants, the stocks that exited the portfolio were from diverse sectors. Larsen & Toubro, Phillips, Cinevista Communications were some of the prominent stocks sold out. Among the mid-cap/small caps to be sold out were Asahi India Safety Glass, Punjab Chemicals, Esab India, ITW Signode, NRB Bearings, Widia, Centak Chemicals, Crompton Greaves, ITC Bhadrachalam, Madura Coats, Mahavir Spinning, and Pearl Global.

Positions enhanced: The fund added to its existing holdings in BHEL, Cipla, Dabur, Cummins, HDFC Bank, SmithKline Consumer, Asian Paints, and Reckitt & Colman. Consumer goods companies appear to have been the key beneficiaries.

Positions reduced: The fund reduced positions in Infosys, HDFC, Telco, Zee Telefilms, Tata Tea, Indian Hotels, and Sundram Fasteners.

After these changes, the fund had a 32 per cent exposure in technology stocks, 28 per cent in automobiles and ancillaries, 13.3 per cent in FMCG and 10 per cent in pharma stocks by end-September. The degree of concentration in the top holdings has come down. While the top 25 stocks accounted for 83.5 per cent of the assets in March, they accounted for just 67.3 per cent by end of September.

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.