Mutual funds hit on IT shares acquired through private placement
Chennai: Mutual funds, which were very active in the recent stock market boom and, which acquired several scrips of IT companies through the private placement route, are finding themselves badly hurt with the downturn in the stock markets.

In a report appearing in the Business Line, the mutual funds are said to have lost or wiped out a major part of their portfolio value. In a study made by the paper, several leading scrips, almost all of which are from the IT sector, have resulted in major mutual funds losing this value.

Ramco Systems Ltd placed shares with SBI Mutual Fund and Unit Trust of India (UTI) at Rs. 3,480 per share and the closing price of the stock on NSE on Thursday was Rs. 2,451.35. Kaashyap Radiant placed equity shares with Prudential ICICI, SBI Mutual Fund, Sun F & C, Kotak Mahindra Mutual Fund, Birla Mutual Fund and Reliance Mutual Fund at Rs. 160 and the closing price at MSE was Rs. 83. These are just a few of the examples.

Several leading brokers are of the opinion that the funds should divest some of their better valued stocks to re-enter the market and pick up shares of the affected IT companies. This, they believe, would bring down the average holding cost of the funds on these shares, besides helping to lift the sentiments (read, price) of the affected shares.
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