The hottest stocks!

et's take a look at the most popular stocks that equity fund managers favour.

There are two types of equity funds: Diversified Equity Funds and Equity-Linked Saving Schemes.

i. Diversified equity funds are a great way to get a piece of the stock market without buying and selling shares directly. You can invest your money in a mutual fund and a fund manager will do the investing on your behalf.

The name itself indicates the fund will invest in various companies of various sectors. Instant diversification!

ii. Equity-linked savings schemes are the mirror image of diversified equity funds with an additional tax benefit.

If we are talking of this investment year (April 1, 2004 to March 31, 2005), you can invest upto Rs 10,000 a year in an ELSS to avail of the tax rebate.

Let's do it with figures.

You have to pay tax = Rs 18,000

Your rebate = 20%

You invest Rs 10,000 in ELSS.

Your savings = Rs 2,000 of your tax (20% of Rs 10,000)

So, instead of paying tax of Rs 18,000, you pay a tax of Rs 16,000 (18,000 - 2,000).

For the next investment year (April 1, 2005 to March 31, 2006), there is a change. You can pick your limit (up to Rs 100,000).

State Bank of India tops the list.

Of the 120 diversified equity funds and ELSS:

• 68 funds have invested in SBI.
• Each fund has invested an average of 5.12% in SBI.
• Nearly a quarter of them have more than 7% of total investment in SBI.

Top 5 scrips in terms of presence

Top 5 scrips in terms of value

Data as on February 28, 2005.