The intent of the government to address the hugely worrying fiscal deficit issue as expressed in the Union Budget looks to have had a positive effect on the stock markets at the very end of February and equity funds benefited somewhat.
On the Bombay Stock Exchange (BSE) the lead gainer for the month was BSE Consumer Durables index, which posted a five per cent gain, while BSE IT, BSE Auto and BSE Healthcare posted over three per cent returns each and BSE Metal clocked 2.75 per cent. The sudden jump by the markets did save BSE Sensex from going into the red as it posted a bare minimum 0.44 per cent returns while S&P CNX Nifty bettered the former by clocking a 0.82 per cent return - the indices have mostly been rising ever since the presentation of the Budget, holding out better hope for March. However, BSE Realty continued its dismal performance as it dropped the most at 7.53 per cent while BSE Oil & Gas and BSE Power fell by over 3 per cent.
Equity Diversified
This category has had a very poor 2010 so far. After ending the last month of the year (December 2009) in the green by posting a return of 4 per cent, it has not been able to repeat the feat now for two months, falling in January to the extent of 4.19 per cent and in February it fell by 0.21 per cent. But its one-year return still stands at 64 per cent.
Out of a total 295 funds in this category, 134 managed to stay in the green while all the rest posted negative returns. UTI MNC, which invests in the equity shares of multinational companies in diverse sectors such as FMCG, pharmaceutical engineering and others, was the best-performing fund in February, posting a 3.27 per cent gain.
The other funds that managed to post over 2 per cent returns were Religare AGILE, Birla Sun Life MNC, Taurus Ethical and Religare Mid N Small Cap. Incidentally, Religare AGILE was the worst-performing fund of January after it posted negative 9.23 per cent return. In February, however, the bottom rung was captured almost entirely by JM funds (eight funds posted negative returns). While it was JM Agri and Infra which dropped the most, by 5.60 per cent, three other JM funds, namely, JM Mid cap, JM Basic and JM Small- and Mid-cap posted the fell in excess of 4 per cent.
The biggest fund in this category, Reliance Growth with Average Assets Under Management (AUM) standing at Rs 6,866.39 crore as on January 31, 2010, dropped by 0.18 per cent after having fared even worse in January as it fell 3.11 per cent.
Tax Planning
This second-biggest equity funds category, fell into the red in January and could not chalk out a recovery in February either as it fell by 0.13 per cent. Still, its one-year return stands at 90.82 per cent.
The best-performing fund in February was Religare AGILE Tax, which managed to post a 2.40 per cent return. Out of a total of 50 funds in this category, 21 posted negative returns. The worst-performing fund for the month however, was Escorts Tax Plan and JM Tax Gain, both of which posted the maximum negative 3.97 per cent and 3.54 per cent returns. The biggest fund in this category, Magnum Taxgain with average AUM standing at Rs 5,409.72 crore too slipped in the red after clocking a negative 0.11 per cent returns. The fund had fallen over 4 per cent in January as well. Interestingly, the smallest fund in this category, with its AUM standing at Rs 0.39 crore posted a better 1.04 per cent returns in February.
Sectoral
Except for FMCG, the other sectoral categories, led from the front by Equity Pharma, managed to stay in the green. Pharma, after falling 3.10 per cent in January, posted a 2.46 per cent gain in February. The other two categories were Technology and Banking, which posted 1.38 per cent and 0.97 per cent returns respectively. Both of them had posted negative 3.16 per cent and 3.03 per cent returns in January. Out of the total of four funds in this category, the best-performing fund in Pharma category was UTI Pharma & Healthcare, which posted a 3.76 per cent return.
Hybrid: Equity-Oriented (Balanced)
This category maintained its Januarys loss-making status in February too. After posting a negative 2.47 per cent returns, it posted a negative 0.21 per cent returns this time too. Out of a total of 33 funds in this category, 16 were in the red with Escorts Balanced being the worst-performing fund, posting a negative 3.50 per cent returns. LIC MF Children Fund too put up a poor show after posting a negative 2.13 per cent returns. At the other end of the spectrum however, it was Reliance Regular Savings Balanced that managed to post the highest returns of the month with 3.53 per cent return.
The biggest fund in this category, HDFC Prudence with Average AUM of Rs 3,488.97 as on January 31, 2010 was the second best-performing fund after it managed to gain by 1.50 per cent. It was also the best-performing fund in 2009, having posted a return of 84.84 per cent.
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