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Banking Funds Race Ahead

The category gained an average 6.64 per cent but fell way short of the 10.41 per cent surge in the benchmark BSE Bankex

Last week was eventful for both equity and debt markets. While the equity investors ignored the ONGC mishap and the incessant rains that raked havoc in Mumbai and helped the Sensex to close at 7,635.42 points, the bond investors cheered RBI's decision on interest rates. Over the week, the 30-scrip Sensex gained 2.86 per cent, while the Nifty added 2.06 per cent. On the bond side, the yields dropped more than 15 basis points.

Equity fund investors had a mixed week with majority of the funds' categories underperforming their benchmarks. Bond funds, especially the longer maturity funds, rewarded their investors.


The Leaders:
Banking funds led the pack of gainers last week. The two-fund category gained an average 6.64 per cent but fell way short of the 10.41 per cent surge in the benchmark BSE Bankex.

The Laggards: Technology and pharma funds slipped in the red last week. The five-fund category of pharma funds lost 1.87 per cent, less than 2.28 per cent fall in the benchmark BSE Healthcare Index. Technology funds shed 0.72 per cent to underperform the 0.17 per cent return of the benchmark BSE IT index.

Diversified and tax-planning funds: Diversified equity funds added an average 0.59 per cent, while tax-planning funds gained 0.79 per cent last week. Both failed to beat the 2.86 per cent return of the benchmark Sensex.

Top-5 diversified equity funds: GIC D'Mat (4.07 per cent), Magnum Equity (3.43 per cent), Franklin India Bluechip (3.22 per cent), UTI Index Select Equity (2.87 per cent), and HDFC Equity (2.78 per cent).

Bottom-5 diversified equity funds: Taurus Discovery Stock (-3.17 per cent), Canexpo (-3 per cent), Tata Service Industries (-1.87 per cent), GIC Fortune '94 (-1.48 per cent), and UTI Equity (-1.43 per cent).

Top-5 tax-planning funds: Magnum Taxgain (3.25 per cent), Canequity-Tax Saver (2.27 per cent), ING Vysya Tax Savings (2.18 per cent), Franklin India Index Tax (2.02 per cent), and Prudential ICICI Tax Plan (1.82 per cent).

Bottom-5 tax-planning funds: Libra Taxshield '96 (-2.56 per cent), Tata Tax Saving (-1.29 per cent), Sahara Tax Gain (-0.51 per cent), Escorts Tax Plan (-0.32 per cent), and BoB ELSS '96 (-0.04 per cent).

Among rest of the equity categories, auto funds gained an average 0.05 per cent, while petro funds added 0.96 per cent.

Equity oriented hybrid funds, which normally maintain 60:40 equity, debt ratio, gained 0.53 per cent last week.


Bond funds performed well last week. Medium-term debt funds managed 0.39 per cent, while medium and long-term gilt funds added 0.87 per cent. Debt short-term (0.12 per cent), floaters (0.11 per cent), ultra short-term (0.09 per cent) and short-term gilt (0.16 per cent) funds too delivered positive returns. MIPs gained 0.35 per cent.

How They Fared
Objective  Return
Equity: Tax Planning 0.79
Equity: Diversified 0.59
Equity: Pharma -1.87
Equity: Auto 0.05
Equity: Banking 6.64
Hybrid: Equity-oriented 0.53
Equity: FMCG 0
Equity: Technology -0.72
Hybrid: Monthly Income 0.35
Equity: Petroleum 0.96
Debt: Medium-term 0.39
Debt: Short-term 0.12
Debt: Floating Rate 0.11
Debt: Ultra Short-term 0.09
Gilt: Short-term 0.16
Gilt: Medium & Long-term 0.87
Sensex  2.86
BSE IT  0.17
BSE HC  -2.28
BSE FMCG  2.07