IT funds return up despite weak Infosys shares

Information technology-sector dedicated schemes managed to offer positive one-week average return, despite Wednesday’s fall in shares of Infosys Technologies, after the IT bellwether pared its rupee revenue guidance for the current financial year by nearly 5%. Robust exposure to mid-cap shares in the portfolio has helped IT sector-dedicated schemes register positive returns.

IT sector funds posted 0.63% average return for the week to Wednesday, compared with a 0.56% rise in the BSE IT Index and a 1.05% gain in the CNX Nifty Index.
On Wednesday, the BSE IT Index and the CNX IT Index shed 3.34% and 2.50%, respectively, reacting to the earnings guidance from Infosys.

For the current financial year, Infosys cut its rupee revenue guidance by 5% to Rs 16,238-16,433 crore from Rs 17,030-17,308 crore that it forecast in April. The near 6% appreciation in the rupee against the greenback during April-June forced the IT major to scale down its earlier guidance.

Among seven IT schemes, three beat the BSE IT Index while only DSP Merrill Lynch Technology.com Fund managed to outperform the CNX IT Index. DSPML

Technology.com Fund emerged the best performer with a 2.07% return because of a mix of telecom, media, and IT shares in its portfolio and low exposure to the Infosys stock.

Among IT funds, Franklin Infotech had the highest exposure to the Infosys stock, comprising nearly 40% of its June-end portfolio, while ICICI Prudential Technology had the least exposure. ICICI Prudential Technology Fund had invested about 3% of its corpus in the Infosys stock.