If you thought that the BSE Mid-cap Index’s fall of 5.3 per cent in the month of May, 2008 was bad news, then wait till you hear about this. The BSE Small-cap Index was the worst hit, falling by 7 per cent.
Well, in such depressing times, it would be interesting to know what the fund managers did with the small-cap stocks. Value Research’s small-cap universe is made up of companies that account for 10 per cent of the total market capitalization. As on 31st May, 2008, there were 492 small-cap stocks.
The major purchases in the small-cap space during the month were Reliance Industrial Infrastructure, Zee News, IBN 18 Broadcast and NIIT Technologies. The pack was lead by Reliance Industrial Infrastructure with 26 funds adding it to their portfolios. Zee News was taken up by six funds while IBN 18 Broadcast and NIIT Technologies found five takers.
It was surprising to find that these stocks were preferred by funds because they witnessed a steep decline in their prices during the month. Reliance Industries went down by 24 per cent, Zee News lost 15 per cent and IBN Broadcast fell by 9 per cent.
The fresh purchases in the month included Nakoda Textile Industries, Prajay Engineers Syndicate, Venus Remedies and Wanbury. All these stocks had witnessed a decline in their prices in the month of May.
The major sell-offs for the month included Jyoti Structures, Alok Industries, Dish TV and Bharti Shipyard. Five funds exited Jyoti Structures while four dropped Alok Industries this time. Both Dish TV and Bharti Shipyard were dropped by three funds each.
In May, 16 stocks were completely ejected out of all funds portfolios, which were Solectron EMS India, Unichem Laboratories, Autoline Industries, Bongaigon Refinery & Petrochemicals, Madras Aluminium Company, Zylog Systems, Raj Rayon, Mawana Sugars, Lok Housing & Constructions, L G Balakrishnan and Bros., Jaypee Hotels, IL& FS Investsmart, Hexawire Technologies, Fairfield Atlas, C C L Products and Aishwarya Telecom. Solectron EMS India has been dropped by all the four funds that held it in the month of April. The stock fell sharply in May losing nearly 31 per cent.
All in all, it was a disappointing month for the small-caps.