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Equity Flat, Debt Suffer

Equity funds failed to maintain their September's momentum in October, while debt funds suffered on account of RBI repo rate hike

Equity markets failed to maintain their September's momentum in October with the Sensex and Nifty gaining 1.59 and 2.37 per cent in the month ended October 31, 2004, as against 7.54 and 6.97 per cent gains, respectively, in September. On the debt side, the RBI repo rate hike, rising oil prices and inflation haunted the bond market with the yield on the 10-year benchmark government security ending the month at 6.86 per cent--up 67 basis points over the month.

Among the equity funds' category, good second quarter results declared by IT heavyweights including Infosys, Wipro and Satyam pushed technology funds up with the category gaining an average 3.57 per cent. However, the tech funds could not beat their benchmark BSE IT Index, which gained 7.86 per cent over the month. Equity diversified funds too underperformed their benchmark-the category added 1.37 per cent against the 1.59 per cent gain of the BSE Sensex. On the other hand, equity FMCG, tax planning and pharma funds outperformed their benchmarks. While tax planning funds ended the month up 1.76 per cent, pharma funds gained 0.02 per cent against the negative 0.49 per cent return of benchmark BSE Healthcare Index. FMCG category delivered a negative 0.63 per cent return but outperformed the benchmark BSE FMCG Index, which lost 2.46 per cent in the month ended October 31, 2004.

On the debt side, the RBI repo rate hike wreck havoc in the bond market with income funds losing thrice what they had gained in the year so far on October 26. The category ended the month in red, losing 0.32 per cent. Gilt medium and long-term too shed 0.91 per cent. While cash funds bettered their last month's performance to gain 0.36 per cent, floaters too added 0.37 per cent. Debt short-term (.007 per cent), gilt short-term (0.12 per cent) and MIPs (0.15 per cent) also managed positive returns.

How They Fared In October ’04
  Fund Objective  Oct-04
  Equity: Diversified 1.37
  Equity: FMCG -0.63
  Equity: Petroleum 3.06
  Equity: Pharma 0.02
  Equity: Tax Planning 1.76
  Equity: Technology 3.57
  Debt: Floating Rate 0.38
  Debt: Medium-term -0.32
  Debt: Short-term 0.01
  Debt: Ultra Short-term 0.36
  Gilt: Medium & Long-term -0.91
  Gilt: Short-term 0.12
  Hybrid: Equity-oriented 1.23
  Hybrid: Monthly Income 0.15
  BSE FMCG Index -2.46
  BSE Healthcare Index -0.49
  BSE IT Index 7.86
  BSE Sensex 1.59
  S&P CNX Nifty 2.37