Stock markets hate uncertainty. And this week both stocks and bonds gained momentum, with war tensions cooling off. Diversified equity funds gained an average 5.18% -- the second-highest gain this year. (The highest gain – 5.77% -- was registered by these funds in the first week of January this year.) These gains look outstanding against the 2.9% gain registered by the BSE Sensex. Because, rather than the broad market, many special situations also catalysed the upsurge in stock values. Telco gained 12.5% while Tisco rose by 10.14% during the week. Auto major was up on account of the rise in car sales in May while steel major's scrip soared thanks to firming up of domestic and global steel prices. The biggest beneficiary this week among all equity funds was Sun F&C Resurgent India Equity Fund, which moved up 11.53%. The reason: it holds big positions in Telco, Hindustan Petroleum and Shipping Corporation. Pharma funds too gained, they were up an average 4.42%, outperforming even the glamorous technology stocks, which rose an average 4.13%.
Even the steadier lot – bond and gilt funds – improved their fortunes. Owing to comfortable market situation, medium-term bond funds were up 0.24%. The front-runner in this category was Libra Bond Fund, gaining almost thrice as much as its peers. Amongst gilt funds, another small-sized fund, the First India Gilt Fund topped its category gaining 1.14%. Overall, the category was up an average 0.54%.
And now let us move to other fund-related news. IDBI Principal Mutual introduced Auto Earnings Payout (AEP) in its Income Fund, the Short-term Plan, the Gilt Fund and Monthly Income Plan. Investors will be allowed to choose this plan and get the equivalent of the dividend paid in the dividend plan of the fund as redemption without any exit load. This will be a tax-efficient way to earn periodic income against receiving dividend, as dividends from mutual fund is taxed in the hands of the investors at marginal tax rates applicable to them, while this way it will be treated as capital gains.
Fund Update: During the week, the Sensex gained 93 points while the broad-based BSE National Index gained about 62 points. All equity funds gained this week. The big gainers this week were open-end equity funds: Sun F&C Resurgent India Equity (11.53%), Reliance Vision (10.48%), Taurus Starshare (9.10%) and Taurus Discovery Stock (9.05%). And those who gained the least were: JM Basic (2.43%), Pioneer ITI Internet Opportunities (2.15%), Escorts Opportunities Fund (1.50%) and Pioneer ITI FMCG (1.39%).
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