Surreal… but Real

From what we have read, seen and heard, we have been partially right in believing that the January-March 2008 period was all about sob stories. And we are partially right because there is a greener side to this as well. Despite the many odds and the general trend, sectors like pharmaceutical and FMCG managed to swim to the shores while their peers drowned after the January Sensex wreck. This meltdown that shaved off 23 per cent saw a few stocks - 12 out of the BSE 500 - that actually had a good outing...

FMCG
Hindustan Uniliver, Nestle and EID Parry were among those which remained intact and benign in the ongoing bull stampede that began in the beginning of 2008. HUL climbed up the hill and moved from Rs 218 in January to Rs 228 at the end of March posting a gain of 4.8 per cent. Similarly, Nestle and EID Parry sweetened by 1.5 per cent and 1.1 per cent in the first quarter of the calender year. The FMCG index however was down 3.5 per cent during the same period. REI Agro - the Rs 1,000 crore rice processing and marketing company, which is also a part of the BSE FMCG Index and has a weightage of 4.46 per cent, was surprisingly not a part of a single fund. A stock which inflated by more than 70 per cent... Hard to believe!

Fund houses have also shown interest in other FMCG stocks like HUL, Nestle and EID Parry. For example HUL appeared in the portfolio of 65 schemes in March, as against 41 in January 2008 and 57 in February. The total number of shares held too increased in a linear proportion. Similarly, as many as 37 schemes had Nestle in their portfolio, as compared to 34 in January, but saw a dip in February; also in terms of shares bought and asset value. However in case of EID Parry, fund houses almost halved their exposure from Rs 29.13 crore in January 2008 to Rs 15.13 crore in March 2008. A total of four FMCG stock bucked the trend in first quarter of 2008.

In the diversified equity category, funds that had maximum exposure in FMCG sector as on March 2008 were Birla India GenNext, Kotak MNC and Birla Sun Life Buy India with over 20 percent exposure and had significantly increased it over the last three months. Among the diversified equity funds, BoB Growth had HUL to the tune of 8.27 per cent of net assets and Franklin in the FMCG sectoral category with 8.22 per cent allocation. Magnum held Nestle India to the extent of 31 per cent of net assets. Birla Balance and Birla Sun Life Buy India had 4.50 per cent of their holdings in EID Parry as on March 2008.

Pharmaceutical
Shareholders of Cipla and Ranbaxy Laboratories took a chill pill as the stocks gained 3.8 per cent each. Cipla moved from Rs 211 to Rs 220, while Ranbaxy moved from Rs 422 in January to Rs 438 in March 2008. The BSE Healthcare Index tumbled over 12 per cent during the same time period. Both Cipla and Ranbaxy have a 13.79 per cent and 15.43 per cent weightage in the index, respectively. Ranbaxy - India's leading drug makers reported a rise in quarterly earnings on strong generic drugs sales. Recently, Goldman Sachs upped the average industry sales growth to 21 percent in FY08, more than its previous forecast of 16 per cent.

The number of fund schemes holding Cipla declined from 32 in January to 29 in March 2008. In case of Ranbaxy too, fund houses missed by a mile! The fund count declined from 58 to 55 in March 2008. The value of holding increased in February from Rs 358 crore in January to Rs 411 crore, before falling to a low of Rs 336 crore.

In the diversified equity category, funds that had maximum exposure to Healthcare were Birla Sun Life Buy India and Canara Robeco Expo at over 15 per cent. UTI Pharma and Healthcare and JM Healthcare Sector had Cipla 7.20 per cent and 5.92 per cent, respectively and 10.66 per cent and 10.43 per cent, respectively.

Besides these, there are a few other stocks that deserve a mention - ICI India and Asian Paints. ICI India Ltd. gained 16.71 per cent and Asian Paints 5.60 per cent in the Jan-March quarter of 2008. Sectoral funds of Magnum, Franklin and ICICI Prudential have the highest exposure in Asian Paints - more than 10 per cent as on March 2008.

Of the IPOs listed in 2008, only Rural Electrification Corporation gave positive returns for the quarter ended in March 2008. A total of 9 fund houses and their 40 schemes had shares worth Rs 218 crore as on March 2008. Exposure to ING Vysya Bank - the lone banker in the category, has been constant throughout the quarter, with a total of 27 funds with holdings worth Rs 371 crore as on March 2008.