The October-December quarter was the time for mutual funds to book profit in equities.

Funds chose to cut exposure in every leading stock, choosing to cash in at a time when the stock market picked up upward momentum after months of gloom.

Among the blue chips, shares of brick-and-mortar businesses remained the favourites with the funds in the past quarter, benefiting from signs of a turnaround on the economic horizon, in continuation of a trend that spanned most of 2002.

Led by Bajaj Auto, Tata Steel and Reliance, the older corporate breed improved their ranks on the funds' popularity chart, according to an analysis by Crisil.

Ruling the roost was Infosys, which reclaimed its top slot from ITC.

The positive sentiment on old economy reflected optimism that the economic impact of the announced drought would be less severe than initially expected.

The BJP's victory in the Gujarat elections and the compromise reached on the privatisation of public sector oil firms between factions of the government were seen strengthening the central government and helped the rally.

Bajaj Auto jumped six places to seventh on the popularity chart for the October-December quarter.

Funds cut position in the stock by the smallest margin among all their 20 favourite stocks (5.21 per cent), as the company has been reaping benefits from a burgeoning two-wheeler market.

In fact, the value of funds' holdings in Bajaj Auto jumped by 22 per cent, driven by the 29 per cent rise in the share's market price during the quarter.

Three other blue chips that improved their rankings were Reliance Industries, Tata Steel and Hindustan Petroleum Corporation Ltd.

Tata Steel moved up three notches to nine, while Reliance improved its ranking by two places to four.

Hindustan Petroleum Corporation Ltd inched up a notch to the second slot. The value of fund holdings in Tata Steel declined by only 42.7 per cent, despite a 55.5 per cent cut in the holdings themselves, due to a 30.5 per cent rise in the share's market price driven by the jump in steel prices across the world.

Most funds seem to have reaped much profit on selling the stock of Reliance Industries, which gained 15.3 per cent in market price riding the euphoria of a large gas find off the Andhra coast.

Funds cut positions in the stock by a massive 92 per cent, leading to a 90.2 per cent fall in the value of holdings.

Funds sold nearly 43 per cent of their holdings in HPCL, but thanks to a 71.2 per cent rise in the stock's market price, the value of holdings was reduced by a mere 2.2 per cent.

The government's patch-up decision on the divestment of the state-owned oil refiner had sent the stock soaring in December after being mired in uncertainty for three months.

SBI, L&T and Dr Reddy's Laboratories climbed one notch each to the eighth, thirteenth, and fourteenth ranks. The SBI scrip gained 23 per cent in market price during the past quarter, riding the upbeat sentiment on bank stocks following the passage of the Securitisation Bill by Parliament.

Rumours that the government may hike the cap on foreign portfolio investment in the stock also helped it gain. Mutual funds reduced their investments in the SBI scrip by nearly 62 per cent, and the value of holdings fell by 53.65 per cent.

Funds cut exposure in L&T by a steep 80 per cent, leading to a slide in the value of total investments by 73 per cent. The market price of the share had gained handsomely by 27.5 per cent during the past quarter.

Equity fund managers took advantage of a 7.7 per cent rise in the market price of the Dr Reddy's Laboratories share and sold 56 per cent of their investments to reap the profit.

Funds' approach to new economy shares did not see much revision during the past quarter, judging from their nearly unchanged positions on the popularity chart.

While Infosys edged up to the top favourite status, Digital GlobalSoft was unchanged at number 20. Satyam Computer and Zee Telefilms inched down by two slots and one to eighth and nineteenth ranks, respectively.

Positions in Infosys were slashed by 70.5 per cent, but holdings declined 58.6 per cent in value as the market price of the share rose sharply by 40.32 per cent.

Mutual funds reduced holdings in Satyam Computer by 79.4 per cent, effecting a drop in value of holdings by 73.5 per cent. They also sold 61.5 per cent of their holdings in Zee Telefilms and 38 per cent of Digital GlobalSoft.

Hindustan Lever Ltd and Cipla made the longest climb-downs on the popularity chart, five places each, to the 12th and 16th slots, respectively.

Funds offloaded a massive 86.7 per cent of the HLL stock owned by them, effecting an 86 per cent decline in the value of such holdings.

Cipla witnessed funds selling off 65 per cent of their investments in it, bringing down the value of fund investments in the stock by 66.3 per cent.

Two other heavyweights that slipped in popularity terms were Tata Engineering and ITC.

Tata Engineering moved down two notches to the sixth position, while ITC ceded its top favourite slot to Infosys and slipped to third.

Among industries, the software sector defended its slot at the top of the mutual funds' popularity chart.

The pharmaceutical business slipped a tad to the third rank, while banking rose to the second slot, riding the euphoria unleashed by the new Securitisation Bill that gave banks extra powers to recover bad loans.

Refining ranked fourth on the chart followed by diversified businesses and then by automobiles.