The Hindu Business Line : PruICICI Discovery

AFTER a winning streak spanning five consecutive months beginning May 2005, the market witnessed some correction in October and has since moved into volatile territory. It is interesting to see the portfolio changes made by fund-houses in such a scenario.

We take a look at how PruICICI Discovery Fund managed its portfolio over August-October 2005. PruICICI Discovery is an open-ended equity fund that aims to generate returns through a combination of dividend income and capital appreciation. The fund seeks to achieve this by investing in value stocks with attractive valuations in terms of earnings, book value or dividend yield.

As of October 2005, PruICICI Discovery fund had 58 stocks in its portfolio. The top ten holdings accounted for nearly 35 per cent of the fund's total asset value. Hero Honda, Cadila Health Care and Bharat Petroleum replaced Mahindra & Mahindra, State Bank of India and Thermax in the top-ten space over the three month-period.

Allocation to sectors was also re-jigged. While the banking sector continued to enjoy top allocation, the segment saw a reduction in weight from 11.3 per cent in July to 9.5 per cent in October. Yes Bank and Syndicate Bank made an exit, even as holdings in State Bank of India were pruned. Auto stocks took the second place in the fund's allocation as opposed to petroleum products three months ago. Consumer non-durables also took the back-seat, to give way to chemicals in the third spot. Nirma and Rayban Sun Optics made an exit from the consumer goods section.

The paper sector found fresh allocation through the stocks of Seshasayee Paper & Boards and Tamil Nadu Newsprint and Papers.

The fund appeared to be bullish on fertiliser sector. Zuari Industries and Gujarat Narmada Valley Fertilisers were added to the portfolio. Cadila Healthcare remained the sole representative from the pharma sector after the exit of Wyeth Lederle. The textile sector gained weight with the addition of Bannari Amman Spinning Mills.

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