This article appeared in the November 15 - December 14, 2009 Edition of Mutual Fund Insight
Metal prices have been on the rise for a while, aided by a weakening dollar, shoots of recovery seen amongst emerging markets, increases in China’s industrial production and Japan’s machinery orders.
Naturally, metal stocks have reflected this trend and are being sought after. In 2009, the BSE Metal index returned 214 per cent between March 9 and October 30.
During this time, shares held by fund managers have grown by over 219 per cent with 135 schemes seeing an increased allocation to the BSE Metal index components (March-September). While the favourites have always been Jindal Steel & Power, Sterlite and Tata Steel, the public sector undertakings (PSUs) have not found many takers, exception being Steel Authority of India (SAIL) with investments worth Rs 152 crore from 21 schemes.
In terms of actual amount invested, Reliance Natural Resources is the biggest investor in metal stocks with an investment worth Rs 489 crore (10.08% of the portfolio) with Tata Steel and Jindal Steel & Power being the largest holdings (6%).
Reliance Growth follows with Rs 474 crore constituting 7.59 per cent of the portfolio. Jindal Steel & Power is one of the top holdings with an allocation of 3.21 per cent.
In terms of portfolio allocation, the funds that stand out are Magnum COMMA (22.09%) and DSP BlackRock Natural Resources and New Energy (15.70%). Both these funds had a high exposure to metal companies way back in January 2009 as well.
JM Hi Fi has moved aggressively. With no exposure to Metals in January 2009, it rose from February (9%) to June (18%). After a slight drop in August, it now stands at 20 per cent.
Canara Robeco Infrastructure stands out by reducing its exposure between June (10%) and August (3%).
Latest data is as of the September 2009 portfolios.