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IT funds slide despite good budget - Views on News from Equitymaster
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  • Mar 7, 2001

    IT funds slide despite good budget

    The net asset values (NAVs) of IT (information technology) funds have witnessed a slide despite what is largely acknowledged as a good budget.

    Open-ended, IT Schemes NAV(Rs) Last week Last month Last year Inception
    BSE - 30 - -1.8% -9.3% -38.1% -
    S&P CNX Nifty - -1.9% -8.7% -32.8% -
    S&P CNX 500 - -4.0% -12.7% -76.6% -
    Tata IT Sector Fund 7.7 -7.9% -16.9% -66.2% 10.0%
    Sun F&C Emerg Tech (Gr) 5.3 -9.6% -19.6% 0.0% -43.8%
    K P Internet Opport.(Gr) 5.6 -10.3% -19.2% 0.0% -41.6%
    Chola Freedom Tech (Cum) 10.4 -12.5% -21.6% -50.5% 0.6%
    Pru ICICI Tech. (Gr) 3.9 -14.3% -25.8% 0.0% -60.6%
    Alliance New Millenn (Gr) 5.7 -14.8% -25.1% -68.1% -61.7%
    Birla IT Fund (Gr) 10.2 -15.7% -26.1% -74.4% 1.3%
    UTI Sector- Software 10.2 -15.8% -30.3% -73.9% -4.2%
    Magnum Sector Funds-IT 9.0 -16.3% -27.0% -73.9% 23.7%
    DSP ML Tech.com (Gr) 5.1 -17.2% -27.2% 0.0% -40.7%
    K Tech 4.3 -17.5% -29.0% 0.0% -45.2%
    K P Infotech (Gr) 17.4 -17.9% -28.7% -68.9% 66.4%
    IL&FS eCOM Fund (Gr) 3.8 -17.9% -29.4% -73.7% -72.3%

    There were many positives for the IT sector in the Union budget 2002. Removal of 10% surcharge on custom duty, hike in foreign institutional investor (FII) investment limit to 49%, investment of ADR/GDR proceeds aboard, are some of the key issues addressed by the finance minister in the budget. These measures were supposed to have had a positive impact on the IT industry. The markets certainly greeted these measures most warmly as was apparent from the 170+ point surge on the day of the budget.

    However, events have taken a most dramatic turn since. IT stocks have witnessed a free fall over the past few days and this is attributed largely to ‘price manipulation’ by brokers. The Securities and Exchange Board of India (SEBI) has set up a team to investigate this issue.

    So what was a dream for the markets has turned into a nightmare. The mutual fund investor must be wondering what went wrong as he finds his delight turn to distress.



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