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Tech stocks are out of favor or so you will hear everyone say. But did it ever strike you that these tech stocks could be excellent picks at current prices. Before that some interesting statistics :

• Of the over 520 mutual fund plans in India currently, over 100 plans are trading below their issue price of Rs.10.

• Of these MF plans trading below Rs.10, the dubious distinction of being in the bottom of the underperformers goes to the tech funds.

A few cases in point. ILFS eCom fund is available at an NAV of Rs.4.71, ICICI Technology Fund at an NAV of Rs.4.81, K-Tech Fund at Rs.5.56, Sun F&C Emerging Markets Fund at Rs.5.58 and the Kothari Pioneer Internet Opportunities Fund and DSP ML Technology.Com fund at a cheap Rs.6.38. The only factor common among all these funds has been that they were all launched at a time when the markets were at the peak of the tech mania and hence their NAVs has been substantially eroded. But the question then is, what makes them attractive at this point of time. Consider the following issues :

• Almost all these tech funds have huge exposures to technology majors in India who have seen substantial erosion in their values since their peaks in early 2000. What it effectively means is that downside risk for these tech funds from these points is extremely limited.

• Secondly, none of these funds has declared dividend, which means you can benefit from the waiting job done by the hasty investors in the mutual fund IPO.

• Thirdly, most of these funds have substantial exposures to liquid assets, which enables to capitalize on the emerging investment opportunities.

• Fourthly, all the tech funds in India have kept their exposures to illiquid dotcoms to a bare minimum. Hence the threat of write-offs is very limited.

• Last but not the least, with Nasdaq down over 40% from its peak of 5000, portfolio managers the world over are increasing their allocation to tech stocks at dirt cheap prices. This is likely to have a rub-off impact on India tech stocks too.

So the moral of the story is that, if you missed out on the tech boom of 1999 and early 2000, not to worry. You are rightly positioned to ride the next tech boom, albeit through tech mutual funds. Go get the tech advantage.

T S Harihar

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