Telecom price war to hit MFs

Mumbai
Oct. 8: The mutual fund investors having exposures to the telecom companies stocks are likely get affected due to the tariff war between telecom companies.
The investment by the mutual funds in telecom stocks is estimated at Rs 8,000 crore. According to the experts, the tariff war between the telecom companies would hamper the profits of those companies and consequently it would affect the NAVs of mutual fund schemes having exposure to the telecom stocks.
Admitting that there is a concern over mutual funds’ exposure to the telecom sector, Mr Alok Mahesh-wari, the executive vice-president and head equities of DSP Blackrock AMC, said: “Fund houses on a regular basis reduce or increase their exposure to various sectors depending upon the performance. Since the last few days, when concerns have been raised about the profitability of telecom companies, fund houses across the board have started reducing the exposure to telecom companies.”
According to some experts, already investors in the mutual funds have seen NAVs declining on account of poor performance of telecom companies.
Mutual funds have invested about Rs 8,000 crore in five major telecom companies. According to valueresearchonline, mutual fund’s share of exposure is largest at 39.06 per cent in Bharti Airtel followed by Reliance Communications (20.38 per cent), Tulip Telecom (18.24 per cent), Sterlite Technol-ogies (13.34 per cent) and Idea Cellular (8.07 per cent).
According to Mr Binu Joseph, research analyst, capital markets of JRG Securities, “Fortunately mutual fund houses have not launched schemes dedicated to the telecom sector. Otherwise, the losses to the investors would have been far more. In the last couple of days the market capitalisation losses of telecom sto-cks were about Rs 35,000 crore and the mutual fund investors also had to bear their share in these losses which was evident in the declining level of NAVs.”
He said: “Though, mutual fund houses would take corrective measures, the bigger threat in the near term would be mobile number portability.”
Source::DC