The markets showed some signs of crawling back in the month of July as the bulls slowly but steadily gained foothold. Overall the month began on a choppy note and after three consecutive weeks of positive gains, the markets went in the red again, and shed close to 100 points. But, the week after markets braved the Mumbai blasts and rate hikes by BoJ to again end the week on a positive note. Good quarterly numbers from IT major Infosys provided some cues. Easing crude oil prices and recovery in Asian markets also supported the markets. But, the rally was short lived as concerns over rate hike by RBI and weak global markets gripped the markets. But, buying emerged on the back of some strong corporate numbers during the end of the month and markets surged over 100 points in four consecutive trading sessions. FIIs ended the month with net investments of Rs 1126.7 crore. However domestic mutual funds maintained their cautious stand and were net sellers to the extent of Rs 80.68 crores.
Top 10 scrips of Sensex as per the returns generated by them in last one year and the strategy MFs followed regarding these scrips in the month of July were considered for this analysis. Topping the list is Bharat Heavy Electrical Ltd which generated returns close to 106% in the last one year.

Domestic Mutual Funds used the recent correction to re enter stocks at current levels, while exiting from some of the stocks. Thus, there was a mixed trend noticed from the mutual funds in the Dalal Street. Stocks like Cipla and Gujarat Ambuja Cements saw some fresh buying in the month of July, whereas there was some further profit booking in the rest of the stocks as the mood continues to be cautious. ITC Ltd and Gujarat Ambuja were the top held stocks by mutual funds in terms of number of shares. Dr. Reddy and Bajaj Auto were the stock where mutual funds were heavy sellers during the month.

*(Returns of Sensex for one month period ended on July 2006)

ACC was the second best performer with 92.38% returns during the year. Fund houses in 113 schemes had exposure in this scrip totaling 11.26 million shares down by 0.53% as compared to previous month. UTI Mutual Fund holds 3.18 million shares through 17 of its schemes. It further hiked the exposure buying 2.69 lakh shares during the considered month. Pru ICICI MF turned out to be major seller and pared the exposure in the scrip by selling 0.76 Lakh shares.

Grasim Industries Ltd posted hefty 78.71% returns in last one year. Twenty one MFs in 135 schemes had 9.38 million shares with them in July 2006 as against 9.64 million shares in June06. Fourteen fund houses out of the twenty one MFs decreased their exposure in the month of July. SBI MF offloaded 1.76 lakh shares and was the biggest seller among all the fund houses. Franklin MF which holds 2.55 million shares maintained its position in the scrip by selling only 0.04 lakh shares in its various schemes. ABN AMRO MF was the major buyer by buying around 0.61 lakh shares.

L&T posted 76.64% returns in last one year. MFs decreased their holding by 0.54% from 5.58 million shares in June 06 to 5.55 million shares as on July end. Franklin MF has the highest holding at 1.52 million shares in eleven of its schemes and maintained its position over the last month. UTI Mutual Fund followed it having 8.51 lakh shares. HDFC Mf added fresh exposure to the scrip by adding around 0.70 lakhs shares to its various schemes. Out of the 25 fund houses holding this scrip ten fund houses have reduced their exposure.

Cipla Ltd was another stock on the charts which delivered 76.41% returns in last one year. 20 fund houses in 79 schemes had exposure in this scrip. The MFs increased their exposure by 16.25% in the stock from 19.81 million shares in June06 to 23.03 million shares in July06.SBI Mutual Fund is holding the maximum number of shares at 5.57 million shares which is a decrease over last month of 1.46 lakh shares. HDFC MF followed it by acquiring 4.28 million shares in 9 of its schemes. Among all the fund houses Prudential ICICI MF sold the highest number of shares at 3.01 lakh in the month of July.