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Petro Funds on Fire

Petro funds gained an average 6.08 per cent to dominate the performance chart of all the equity funds, while rally in the bond market helped bond funds deliver positive returns for the third successive week

Equity Funds
Petro funds were on fire in the week ended December 3, 2004. After giving negative returns for two successive weeks, the two funds category gained a whopping 6.08 per cent in the week to top the return chart of all funds' categories.

Both UTI Petro and JM Basic performed well, with the former giving a slightly better return. While UTI Petro was up 6.21 per cent, the later gained 5.95 per cent. A closer look at the portfolio of the two funds explains why the two funds did well.

All the top five holdings of UTI Petro, including ONGC, IOC, Reliance Industries, GAIL and IPCL were on a roll—all of them returned more than 5.5 per cent, with Reliance Industries ending the week up 7.90 per cent. GAIL too zoomed 7.85 per cent.

JM Basic has similar story. Barring Chennai Petroleum Corporation, stocks in the top five holdings of the fund returned more than 5 per cent. HPCL, which accounts for 10.11 per cent of the assets of the fund, gained a massive 10.98 per cent in the week.

All other equity funds' categories underperformed their benchmarks. Diversified funds ended the week up 2.95 per cent to underperform the 4.77 per cent return of benchmark BSE Sensex. Interestingly, diversified funds have been underperforming the benchmark for the last five weeks. Also, of the 113 diversified funds as on December 3, 2004, only 13 were able to beat the Sensex. Tax-panning funds too followed their diversified friends and ended the week up 2.41 per cent.

Not so good performance of technology stocks resulted into underperformance of tech funds—the seven-fund category could manage only 0.79 per cent against the 0.94 per cent return of benchmark BSE IT Index.

Pharma funds proved to be major underperformers. The five-fund category could add only 0.20 per cent against the 2.80 per cent gain of benchmark BSE Healthcare Index.

FMCG funds could not continue their last week's dominating position and ended the week up 1.31 per cent against the 2.91 per cent gain of the benchmark BSE FMCG Index.

Equity-oriented hybrid funds took advantage of the rally in the equity markets. The category ended the week up 1.95 per cent.

Bond Funds
Rally in the bond markets on account of cancellation of bond auction and easing global crude oil prices had a positive impact on bond funds—all categories not only delivered positive returns, but also improved on their last week's performance (except cash funds).

Income funds gained 0.51 per cent, while Gilt medium and long-term added 1.09 per cent over the week. MIPs too did well to gain 0.73 per cent. Debt short-term (0.17 per cent), floaters (0.11 per cent), cash funds (0.09 per cent) and gilt short-term (0.22 per cent) also delivered positive returns over the week.

How They Fared
Objective  Return
Equity: Diversified 2.95
Equity: Tax Planning 2.41
Equity: Technology 0.79
Equity: Pharma 0.2
Equity: FMCG 1.31
Equity: Petroleum 6.08
Hybrid: Equity-oriented 1.95
Debt: Medium-term 0.51
Hybrid: Monthly Income 0.73
Gilt: Medium & Long-term 1.09
Debt: Short-term 0.17
Debt: Floating Rate 0.11
Debt: Ultra Short-term 0.09
Gilt: Short-term 0.22
BSE Sensex 4.77
BSE IT Index 0.94
BSE Healthcare Index 2.8
BSE FMCG Index 2.91