The last few weeks have seen fund managers selling stocks big-time. The selling is in line with the bearish mood in the markets at present.

Most if not all funds have reduced exposure to technology, media and telecom (TMT) significantly. On the other hand, they have enhanced old economy holdings. For instance, while Birla Advantage Fund had close to 70% in TMT last year, they have cut that down to 11% in March 2001. Funds have offloaded heavily to meet redemptions. Some equity funds have sold TMT stocks and have played safe by keeping away from equities for the time being. For e.g. Birla IT Fund has over 60% of net assets in call money. Some other equity funds have increased their fixed income holdings giving it a balanced-fund look.

With equity markets showing no discernible sign of firming up, the selling is likely to continue unabated. This market is proving to be the real test of fund management skills. So far very fund managers have redeemed themselves and the heavy selling is witness to that.

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