This week, like any other week, was rather dull for the markets. Nothing out of the blue happened. Some little tinkering with fund/stock prices, some corporate results. Nothing much. It would have continued like this, but then the FM did a volte-face. He, as usual, rolled back some of the Budget announcements.
Mr Sinha has brought back the smile to the small investor's face. He has increased tax rebate on investments from 10% to 15% for those with an annual income between Rs 1.5 lakh and Rs 5 lakh. This in addition to an enhancement in the maximum amount of investment eligible for tax rebate – raised from Rs 80,000 to Rs 1,00,000 -- under Section 88 of the Income Tax Act. Tax deduction under section 80L of the IT Act has been reintroduced. Dividend income from all sources – companies or mutual funds – will be exempted from tax subject to a limit of Rs 9,000. Also, tax will be deducted at source only for income above Rs 1,000.
Moving away from Sinha to the markets, the performance of funds this week was more or less like it was last week. Tech and FMCG remained in the news. Tech funds were down 0.40% as against a 1.8% fall on the BSE IT Index. But the loss was marginal compared to the previous week when tech funds lost about 2% and tech stocks over 3%. What stemmed the tide was a 13% rise in gross revenues of HCL Technologies and Hughes Software's announcement of a 15% growth in its sales despite a 43% drop in its bottomline for the quarter ended March 31, 2002.
Likewise, FMCG funds were down 0.44%, albeit less than the 2.64% fall the previous week. While tech and FMCG funds slipped, pharma funds were on a high, up 0.46%. More action is anticipated the coming week with Glaxo-SmithKline Pharma reporting a 49% rise in net profits for the quarter ended March 31, 2002. Incidentally, the pharma major figures among the top 10 holdings of the 3-pharma funds in existence.
That apart, equity-diversified funds on an average gained 0.28% against a 0.22% rise on the Sensex. Medium-term bond funds were up 0.23%. Likewise, all categories of debt funds reported gains.
Fund Update: During the week, the market gained 7 points on the Sensex but lost about 6 points on the broad-based BSE National Index. The key gainers during the week were Magnum Contra (4.58%), Sun F&C Resurgent India Equity (3.25%), Reliance Growth (2.53%) and Zurich India Capital Builder (2.03%). The major losers were Pioneer ITI Infotech (-2.25%), Pioneer ITI Internet Opportunities (-1.37%), Pioneer ITI FMCG (-1.35%) and GIC Growth Plus II (-1.25%).