An increased number of India’s equity diversified funds favoured technology companies such as Wipro and Tata Consultancy Services (TCS) among Sensex stocks in 2013, raising their bets on a sector that benefited from a depreciating rupee and improving demand from developed economies.
Nearly 160 of 322 such funds had investments in India’s No. 3 IT services provider Wipro in December as compared to 91 funds a year ago, more than doubling the collective stake held in the company, data from Morningstar India showed. India’s top IT services exporter TCS was part of 190 portfolios, up from 155.
A weak rupee and improving business from clients in the United States and Europe propelled technology stocks to new highs in 2013 — TCS registered a rise of 73 percent while Wipro gained 61 percent, outperforming the BSE IT index that touched a life high and ended 59.7 percent higher. In comparison, the BSE Sensex had risen 9 percent.
“With the (domestic) economy slowing down and high interest rates, obviously the allocation shifted towards all these sectors where the outlook was improving and earnings were being revised upwards,” said Mahesh Patil, co-chief investment officer at Birla Sun Life Mutual Fund that manages assets of more than $12 billion and has investments in both TCS and Wipro.
India’s diversified equity mutual funds rose 4.8 percent on average in 2013 but underperformed the Sensex for the first time in five years, Lipper data showed, as the performance of mid- and small-cap shares and financial companies weighed.