By Parinaaz Hansotia, edited by Sandeep Deshmukh/NewsWire18

Domestic fund managers are gradually turning positive on the information technology sector after a gap of almost a year. The fund managers had shied away from the sector after it had lost its appeal following to economic recession globally. They are, however, cautious over the currency movements. Revival of Indian software companies as evident in the July-September earnings has prompted fund managers to raise their portfolio exposure in these companies. "The (IT) sector has surprised everyone positively, so our view is also the same," said Gopal Agrawal, head-equities, Mirae Mutual Fund. July-September quarter results of frontline information technology counters such as Infosys Technologies, Tata Consultancy services, Wipro have beaten market expectations.

"The only downside marginally would be the appreciating rupee, otherwise there has been a significant improvement in the overseas market, as it can be seen from IT companies earnings," said Sandesh Kirkiree, Chief Executive Officer, Kotak Mahindra Mutual Fund. However, a fund manager with a private fund house sees things improving slowly. Also, the currency fluctuations will also have its bearing on the sector, he added. "Things have stopped deteriorating as was the case three to six months ago. Things have stabilised and now returning to growth path," Jayesh Shroff, equity fund manager with SBI Mutual Fund said. He added that as and when "western geography revives, Indian IT firms will benefit from it". Mirae Asset Mutual's Agrawal seconds this view, saying, "As soon as things recover in the global scenario, Indian IT companies will fare better". "The global recovery will remain slow. Even though the results of IT companies have come out well, but they are talking about volumes. The overall growth will improve slowly," the fund manager said. The earnings growth for IT companies in 2009-10 is seen around 20% on year, Agrawal said.

MF's TOP PICKS

Fund houses such as Kotak Mahindra Mutual Fund and Mirae Asset Mutual are already overweight on IT companies in its equity portfolio, while SBI Mutual Fund and Principal Mutual are neutral to the sector. Asset managers mostly favour the large-cap information technology stocks, although few find opportunities in select mid-cap stocks. Over a one-year period till Thursday, the average returns posted by technology funds was 72.47%. During the same period, CNX IT and BSE Infotech indices advanced 74.47% and 64.37%, respectively, to 4705.55 and 4447.39.

The best performing technology schemes were:

As of Sep-end the top-five stock picks of the top three technology funds were:

ICICI Prudential Technology Fund

Infosys Technologies

eClerx Services

Tata Consultancy Services

Wipro

Infotech Enterprises

DSPBR Technology.com

Infosys Technologies

Tata Consultancy Services

HCL Technologies

Mphasis

Financial Technologies

Franklin Infotech

Infosys Technologies

Tata Consultancy Services

Wipro

Oracle Financial Services Software

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