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Funds Exploit Equity Markets' Rally

All equity funds' categories deliver positive returns. Banking funds lead the rally followed by the banking sector reforms announced by the RBI last week

The stock markets' recovery helped equity funds deliver positive returns last week. The pack of gainers was lead by banking funds. The category gained on back of a rally in the banking stocks after the RBI announced reforms in the sector. All bond funds' categories too ended in the positive territory.


The Leaders:
The two-member banking funds category gained the most last week--up 5.63 per cent to beat the 4.75 per cent return of the benchmark BSE Bankex. While the UTI Banking Sector fund surged 6.02 per cent, Reliance Banking added 5.23 per cent.

The Laggards: Though all the equity funds' categories posted positive returns last week, FMCG funds gained the least. However, the category average return of 2.48 per cent was much better than the 0.08 per cent loss of the benchmark BSE FMCG Index.

Diversified and tax-planning funds: Diversified equity funds gained 3.08 per cent, while tax planning funds ended the week up an average 3.17 per cent. Both underperformed the 3.80 per cent gain of the benchmark Sensex.

Top-5 diversified funds: Prudential ICICI Emerging STAR (5.17 per cent), GIC Fortune '94 (4.89 per cent), HSBC India Opportunities (4.75 per cent), Escorts Growth (4.75 per cent), and Birla India Opportunities (4.73 per cent).

Bottom-5 diversified funds: JM Equity (1.52 per cent), Tata Service Industries (1.59 per cent), LICMF Growth (1.61 per cent), UTI PEF Unit Scheme (1.63 per cent) and Alliance Buy India (1.70 per cent).

Top-5 tax-planning funds: Magnum Taxgain (4.53 per cent), Prudential ICICI Tax Plan (4.06 per cent), Birla Equity Plan (3.97 per cent), Franklin India Index Tax (3.88 per cent), and Principal Personal Tax Saver (3.86 per cent).

Bottom-5 tax-planning funds: Libra Taxshield '96 (1.99 per cent), Sundaram Taxsaver (2.56 per cent), Sahara Tax Gain (2.61 per cent), Tata Tax Saving (2.61 per cent), and Principal Tax Savings (2.75 per cent).

Technology funds too surged 5.19 per cent to marginally underperform the 5.20 per cent return of the BSE IT Index. Petro funds were on fire--they added 4.77 per cent. Pharma and auto funds gained 3.32 and 4.61 per cent, respectively.

Equity oriented hybrid funds, which normally maintain 60:40 equity, debt ratio, added 2.15 per cent last week.


All the bond funds' categories posted positive returns last week. Medium-term funds gained 0.12 per cent, while gilt medium & long-term category added 0.05 per cent. Debt short-term (0.10 per cent), floaters (0.12 per cent), ultra short-term (0.09 per cent) and short-term gilt (0.08 per cent) funds too delivered positive returns. MIPs added 0.62 per cent.

How They Fared
Objective  Return
Equity: Tax Planning 3.17
Equity: Diversified 3.08
Equity: Pharma 3.32
Equity: Auto 4.61
Equity: Banking 5.63
Hybrid: Equity-oriented 2.15
Equity: FMCG 2.48
Equity: Technology 5.19
Hybrid: Monthly Income 0.62
Equity: Petroleum 4.77
Debt: Medium-term 0.12
Debt: Short-term 0.10
Debt: Floating Rate 0.12
Debt: Ultra Short-term 0.09
Gilt: Short-term 0.08
Gilt: Medium & Long-term 0.05
Sensex  3.80
BSE IT  5.20
BSE HC  3.57
BSE FMCG  -0.08
BSE Bankex  4.75