Pioneer ITI Bluechip: Hold

Recommendation: Hold

S. Vaidya Nathan

PIONEER ITI Bluechip Fund did not exactly have a good July-September quarter. Compared to benchmark indices and other diversified funds, the relatively high exposure to tech stocks and the absence of Dr Reddy's among the pharma holdings proved to be a drag.

But this is one of few quarters when the fund has slipped up. Its long term track record, one year performance and current portfolio provide confidence of a good showing. With a sizeable restructuring of the portfolio and aided by favourable by stock price trends, the fund has had a good showing in October. Existing investors can stay invested.

The fund is focused on a small number of large cap, frontline and liquid stocks. The portfolio turnover has been rather high in October at 160.75 per cent pointing to the aggressive churning of the portfolio. The following are some key changes made to the portfolio in October:

Stocks in: The fund added the following stocks to its portfolio _ Dr Reddy's Laboratories, HDFC and ACC. It also picked up the ADS of Dr Reddy's Laboratories. Pioneer ITI Bluechip appears to have decided to step up exposures rather late in Dr Reddy's, and it is possible that it may entered at fairly high levels. It may have to wait quite a while to reap gains on this belated exposure, having missed almost the entire bullish phase in the stock.

Enhanced exposures: The fund has stepped up exposures to Hindalco, HPCL, Cipla and ICICI Bank ADS. It already holds shares of ICICI Bank in the domestic market.

Stocks out: Only one stock _ Grasim Industries _ exited the portfolio completely. How this move pans out in the event of the acquisition of a strategic stake in L&T would be worth a close watch.

Pared exposures: The fund has cut exposures to HCL Technologies, ICICI, Cummins India, BPCL, Reliance Industries, Nirma, VSNL, Infosys, Novartis and Aventis Pharma.

Fund flows: The fund has witnessed small inflows with the NAV rising by 10.5 per cent while net assets were up by 11.9 per cent. The fund had net assets of Rs 229.96 crore as of end October.