Over 73 per cent of the domestic fund managers who
participated in a DSP Merrill Lynch survey on mutual funds
(MFs) made it clear that preference will now be given
to value stocks due to the dampening of growth in the
last time we witnessed this pattern was in November 2002,
but reference at the time was only to a marginal degree.
Moreover, the linking for cyclical and large-cap stocks
continued into April 2003," said the report.
survey, which was conducted in April 2003, said bullishness
in the banking sector continued, in line with the overweight
stance on the sector (banks constitute over 25 per cent
of the of MFs model portfolio).
structural shift in lending towards retail assets and
the likely non-performing asset recoveries through asset
restructuring companies underpin optimism about the sector.
There was a reduction in optimism about the auto sector
as the truckers' strike, competitive pressures and a weakening
rural demand affected the sentiment.
other sector to witness reduced optimism was the software
sector following lowered growth expectations. "We
continue to be overweight in the auto sector but neutral
in the software sector. Meanwhile, fund managers continue
to be largely under weight in the fast-moving consumer
goods (FMCG) sector followed by cement and steel. Around
55 per cent fund mangers are expecting the Sensex to be
in the range of 3400-3700."
to the survey, fund managers held a widely shared perception
that the markets are undervalued. For almost six months
now there have been no skeptics to this theory. Nonetheless,
the degree of bullishness has moderated, as only 40 per
cent now believe that the markets are undervalued by more
than 20 per cent compared with 70 per cent who believed
in this view during the last few months.
survey said cash levels have gone up slightly from last
month with 50 per cent holding cash between 6-9 per cent
compared with 3 per cent and below last month.