Pharma, banking funds top gainers in March

NEW DELHI Mon Apr 5, 2010 2:33pm IST

A broker looks at a computer screen at a stock brokerage firm in Mumbai in this July 2009 file photo. REUTERS/Arko Datta/Files

A broker looks at a computer screen at a stock brokerage firm in Mumbai in this July 2009 file photo.

Credit: Reuters/Arko Datta/Files

NEW DELHI (Reuters) - Sectoral funds investing in pharma and banks topped the performance charts among equity funds in March, while diversified stock plans lagged due to high exposure to cash and sectors like capital goods.

Pharma funds on an average returned 10.8 percent during the month while financial services funds earned 7.9 percent, data from fund tracker Lipper, a Thomson Reuters company, showed, higher than the 6.7 percent gain in the BSE Sensex.

"The passage of U.S. healthcare bill would benefit Indian drug companies - this helped pharmaceutical stocks and in turn funds," said Chintamani Dagade, senior research analyst at Morningstar India.

Financial firms, the most favoured sector of money managers in India, did well on improving credit outlook, analysts said.

The BSE Banking index gained 8.4 percent in the month with large private lenders like ICICI and HDFC Bank gaining 9.27 and 13.36 percent, respectively.

"The outlook for credit growth is definitely far better than what the actual growth has been for last year," said Vetri Subramaniam, head of equities at Religare Asset Management, whose Religare Banking Fund was the category's best performer in March.

"In an overall sense that should be positive for the banking sector," he added.

Actively managed equity diversified funds, the biggest category of stock funds in India by number and assets, recorded a 6.05 percent growth in unit values, mildly underperforming the benchmark index.

Higher allocation to sectors like technology and capital goods and a near 7 percent exposure to cash hampered the performance of these funds, experts said.

The BSE IT index rose 1.2 percent, while the capital goods index gained 4.5 percent in March.

These two sectors collectively accounted for nearly 20 percent of such funds' equity investments at the end of February, data from fund tracker ICRA Online showed.

BOND, GOLD FUNDS

Indian fixed income funds that invest in government securities, which lost 0.2 percent in February, made a comeback in March by gaining 0.65 percent.

The 10-year federal bond yield did not change much on a month-on-month basis, but fell to their lowest in seven weeks on March 30 after a lower-than-expected government borrowing schedule for the six months beginning April.

"Investors also used lower prices as an opportunity to invest in market," Dagade of Morningstar India said.

The Reserve Bank of India raised both its key short-term rates by 25 basis points each on March 19, citing intensifying inflationary pressures and a steady economic recovery.

India's gold exchange traded funds (ETFs) lost 2.46 percent during the month as a strong dollar overseas reduced the precious metal's appeal as an alternative investment.

On the continuous charts, gold futures ended March at 16,295 rupees per 10 grams, down nearly 3 percent during the month.

(Editing by Ramya Venugopal)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Canada Shooting

Canada Shooting

Attack on parliament, killing of soldier stun Canada's capital.  Full Article 

Earnings Season

Earnings Season

Wipro sees rosier end to year as U.S. clients spend.  Full Article 

Business Climate

Business Climate

Fears for tough penalties grow as India cleans up business  Full Article 

New Email Service

New Email Service

Google launches new email service dubbed "Inbox".  Full Article 

DLF Appeals

DLF Appeals

DLF seeks interim relief from capital market ban  Full Article 

Falling Oil Prices

Falling Oil Prices

Indian consumers respond to softer oil, food prices  Full Article 

Book Keeping

Book Keeping

RBI fires warning shots on companies' lack of FX hedging.  Full Article 

Policy Repo Rate

Policy Repo Rate

Most external members suggested rate cut in RBI's Sept review.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage