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Dry Spells In June

Every equity fund category posted negative returns in June, making it one of the worst performing months

The month of May 2008 turned out to be one of the worst-ever months for the Indian stock markets, but unfortunately, its succeeding month didn't fare any better. After the steep fall in May, the bearish spell continued to engulf the stock markets in June 2008 as well. In June, the Sensex reported a fall of 18 per cent, while other indices like BSE Bankex, BSE Auto, BSE IT, etc hit their all time low as well. And like in the previous month, the main culprits leading to the market crashes were mounting inflation and weak economic signs prevailing not only in our country, but globally as well. Investors' sentiments are seemingly hurt significantly with most of the mutual fund categories posting negative returns.

Let's take a look at the performance of the various categories of mutual funds in the month of June. Overall, the situation wasn't a good one with almost all categories ending the month in the red. Even the few ones that had managed to hold their own in May, failed to charm in June.

The worst hit category was Equity Banking with negative returns of 20.8 per cent. The category was closely followed by Equity Tax Planning (-17.4 per cent) and Equity Auto (-16.6 per cent).

The only category to have ended the month on a positive note is that of Gold ETF. By posting a return of 6.8% in June, the category has managed to hold its position of best performing category, intact.

Apart from Gold ETFs, technology and pharma funds had done well in May, but didn't do that well in June. Equity Technology posted negative returns of 14 per cent while Equity Pharma was down by 6 per cent.

The largest category - Equity Diversified - also witnessed a free fall in the month, posting negative returns of 17 per cent. Comparatively, the category had lost much less in May - 4.9 per cent. DSPML Natural Resources and New Energy Fund turned out to be the best performing fund of the category, losing 6.7 per cent, while JM HI FI was the worst. The fund lost nearly 25 per cent during the month.

The good news for the month came from the debt funds, with all categories, except Debt Medium-term and Gilt Medium and Long-Term, delivering positive returns. Debt Medium-term lost 0.4 per cent, while Gilts lost 0.15 per cent. This time, again, the debt funds with lower maturity posted higher returns than the long-term debt fund and Gilt funds.

Looking ahead, markets experts are of the opinion that the monsoon will bring a spell of good fortune for the markets. Let's hope that happens so that we can report some positive news in next month's performance review.

Fingers crossed!