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Petro Funds Run Out of Gas

After managing the volatility of week ended January 7, 2005, very well, petro funds ran out of gas this time and lost the most among the equity funds' categories

Equity Funds
In the week ended January 14, 2005, the 30-stock BSE Sensex lost 3.84 per cent, while Nifty fell 4.19 per cent. Under selling pressure, almost all the counters ended the week in red. The mayhem in the stock markets hit the equity mutual funds as well with all the categories delivering negative returns.

After managing the volatility of week ended January 7, 2005, very well, petro funds ran out of gas this time and lost the most among the equity funds' categories. The two-member category plunged an average 5.23 per cent.

All other categories though lost but outperformed their respective benchmarks.

Fear that the government might impose excise tax on the maximum retail prices of drugs resulted into heavy losses for pharma sector with majority of stocks losing over the week. The BSE Healthcare Index slumped 8.19 per cent. However, the five-member pharma funds' category managed the downside quite well and ended the week down just 4.61 per cent. All the funds outperformed the benchmark BSE Healthcare Index, with Magnum Pharma fund losing the least at 2.46 per cent.

FMCG funds, though slipped in the negative zone, but managed to slowdown the fall by losing 2.14 per cent against the negative 2.27 per cent return of the benchmark BSE FMCG Index.

IT stocks too lost heavily in the week ended January 14, 2005, with BSE IT Index shedding 4.31 per cent. However, technology funds outperformed the benchmark and lost only 3.58 per cent.

Tax-planning and diversified funds also beat the negative 3.84 per cent return of their benchmark Sensex. The two categories lost 3.06 and 3.47 per cent, respectively.

The crash in the equity markets had a negative impact on equity oriented hybrid funds as well. The category ended the week down 2.41 per cent.

Bond Funds
MIPs and income funds delivered negative returns this week. Monthly income plans, which have a small exposure to equities, lost 0.54 per cent.

After delivering positive returns for eight straight weeks, income funds suffered losses this time and ended down 0.03 per cent.

Cash funds, debt short-term funds and floaters added 0.09 per cent each in the week ended January 14, 2004.

Gilt short-term funds (0.08 per cent) and Gilt medium & long-term funds (0.20 per cent) also delivered positive returns.

How They Fared
Objective  Return
Equity: Tax Planning -3.06
Equity: Diversified -3.47
Equity: Pharma -4.61
Hybrid: Equity-oriented -2.41
Equity: FMCG -2.14
Equity: Technology -3.58
Hybrid: Monthly Income -0.54
Equity: Petroleum -5.23
Debt: Medium-term -0.03
Debt: Short-term 0.09
Debt: Floating Rate 0.09
Debt: Ultra Short-term 0.09
Gilt: Short-term 0.08
Gilt: Medium & Long-term 0.20
BSE Sensex -3.84
BSE IT Index -4.31
BSE Healthcare Index -8.19
BSE FMCG Index -2.27