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Equity Funds Struggle

All equity funds categories lost last week. The pack of losers was led by banking and petro funds

It was a tough week for equity mutual funds. Both the Sensex and Nifty skidded over 3 per cent. Consequently, all the equity funds' categories incurred losses. The pack of losers was led by banking and petro funds. Fear of interest rate hike after the Annual Policy Statement led to a massive fall in the banking stocks' prices.


The Leaders:
Though all equity funds' categories posted negative returns last week, FMCG funds lost less. The three-member category ended the week down only 0.72 per cent as against the 2.90 per cent return of the benchmark BSE FMCG Index. Pru ICICI FMCG was the best of the lot as it shed only 0.21 per cent, followed by the 0.40 per cent loss of Franklin FMCG. Magnum FMCG shed 1.53 per cent.

The laggards: Banking funds were the worst hit during the week. UTI Banking fund lost 5.68 per cent, while Reliance Banking slipped 3.86 per cent.

Petro funds too lost an average 3.13 per cent.

Technology funds continued their downward march for the fourth consecutive week. The seven-fund category lost 2.91 per cent. Kotak Tech lost the most--the fund skidded 3.82 per cent.

Diversified and tax-planning funds: Diversified equity funds lost 2.29 per cent, while tax planning funds ended the week down an average 1.98 per cent. Both beat the benchmark Sensex, which dived 3.03 per cent last week.

Top-5 diversified funds: Kotak Opportunities (0.76 per cent), Taurus Discovery Stock (0.42 per cent), Magnum Emerging Businesses (0.40 per cent), Magnum Global (0.39 per cent) and Franklin India Prima (0.20 per cent).

Bottom-5 diversified funds: Canexpo (-5.20 per cent), HSBC Equity (-4.34 per cent), Principal Focussed Advantage (-4.28 per cent), Prudential ICICI Growth (-4.17 per cent) and ABN AMRO Equity (-4.15 per cent).

Top-5 tax-planning funds: Magnum Taxgain (2.24 per cent), HDFC Long Term Advantage (-0.03 per cent), HDFC Taxsaver (-0.06 per cent) Sundaram Taxsaver (-0.07 per cent ) and Prudential ICICI Tax Plan (-0.86 per cent).

Bottom-5 tax-planning funds: Libra Taxshield '96 (-5.03 per cent), Canequity Tax Saver (-4.81 per cent), Principal Personal Tax Saver Fund (-3.62 per cent), Franklin India Index Tax (3.27 per cent) and Alliance Capital Tax Relief '96 (-3.03 per cent).

Pharma funds lost 1.20 per cent, while auto funds shed 1.33 per cent. Equity oriented hybrid funds, which normally maintain 60:40 equity, debt ratio, lost 1.51 per cent.


It was a better week for the bond funds as compared to their equity counterparts. While the medium-term and gilt medium & long-term categories lost 0.01 and 0.15 per cent, respectively, all other debt funds gained. The short-term category was up 0.09 per cent, while floaters gained 0.11 per cent. Ultra short-term funds too added an average 0.09 per cent.

How They Fared
Objective  Return
Equity: Tax Planning -1.98
Equity: Diversified -2.29
Equity: Pharma -1.20
Equity: Auto -1.33
Equity: Banking -4.77
Hybrid: Equity-oriented -1.51
Equity: FMCG -0.72
Equity: Technology -2.91
Hybrid: Monthly Income -0.38
Equity: Petroleum -3.13
Debt: Medium-term -0.01
Debt: Short-term 0.09
Debt: Floating Rate 0.11
Debt: Ultra Short-term 0.09
Gilt: Short-term 0.07
Gilt: Medium & Long-term -0.15
Sensex  -3.03
BSE IT  -4.18
BSE HC  -1.31
BSE FMCG  2.90
BSE Bankex  -6.36