Smaller-cap stocks help mutual funds in February

NEW DELHI Fri Mar 2, 2012 5:43pm IST

Brokers trade on their computer terminals at a stock brokerage firm in Mumbai July 23, 2008. REUTERS/Punit Paranjpe/Files

Brokers trade on their computer terminals at a stock brokerage firm in Mumbai July 23, 2008.

Credit: Reuters/Punit Paranjpe/Files

Stocks

   

NEW DELHI (Reuters) - Diversified equity funds posted better returns than the BSE Sensex in February, helped by small and medium-sized stocks that rose on increased foreign and domestic buying.

Diversified funds, the largest category of stock funds in India by number and assets, returned an average 4.8 percent in the month, according to fund tracker Lipper, a Thomson Reuters company.

These funds outperformed the benchmark index, which rose 3.25 percent on robust inflows from foreign institutional investors (FIIs) and hopes of easing monetary policy.

Favourable global liquidity conditions encouraged foreign investors to buy more than $7 billion of Indian equities so far in 2012, pushing up the index by more than 14 percent.

"With the backing of FIIs, retail participation increased in mid- and small-caps, which pushed them higher," said R. K. Gupta, managing editor at Taurus Mutual Fund. "However, the outlook for these shares is likely to be cautious going ahead."

Mid- and small-cap shares accounted for more than a third of the assets of diversified funds at the end of January, and holdings of such stocks rose to the highest level since January 2011, Morningstar India data showed.

During the month, the BSE mid-cap index rose 8.8 percent while the small-cap index gained 6.14 percent.

Exposure to the financial services sector -- the top sector bet for money managers, with an allocation of over 20 percent -- also helped equity diversified mutual funds as the Bombay Stock Exchange banking index rose 5.12 percent.

Shares of top-lender State Bank of India (SBI.NS) gained 9 percent, while HDFC Bank (HDBK.NS) rose 5 percent on hopes the central bank will further reduce the cash reserve ratio for banks to help ease tight liquidity conditions.

Two diversified funds from HSBC (HSBA.L), the HSBC Midcap Equity Fund and the HSBC Progressive Themes Fund, were India's top performing mutual funds in February, returning more than 11 percent.

Among sectoral funds, those focusing on technology returned more than 7 percent while those investing in financial services registered a rise of nearly 6 percent.

IT stocks were among the best performers in February, pushing up the BSE IT index by 6.6 percent.

"Indian IT companies offer a significant value proposition to their international clients and offshoring of services will increase over a period of time," said Nilesh Shetty at Quantum Asset Management Co. "This will augur well for the sector."

Fixed income funds that invest in government securities rose 0.75 percent in the month, as the yield on the benchmark bond fell 7 basis points.

Gold exchange traded funds (ETFs) rose a little more than 1 percent on an average in the month.

(Reporting by Aditya Kalra; Editing by Ted Kerr)

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

Public Health

REUTERS SHOWCASE

Airtel Profit Jumps

Airtel Profit Jumps

Bharti Q2 net profit more than doubles   Full Article 

Maruti Earnings

Maruti Earnings

Maruti Suzuki net profit up 29 percent, beats estimates.  Full Article 

ICICI Results

ICICI Results

ICICI Bank Q2 profit up 15 percent, beats estimates.  Full Article 

Cost Cutting

Cost Cutting

PM Narendra Modi boots officials out of the first class cabin  Full Article 

Market at Record

Market at Record

Sensex, Nifty hit record highs; reforms outpace hawkish Fed.  Full Article 

Moody's on India

Moody's on India

Moody's welcomes India's policy steps, but wants to see more.  Full Article 

End Of QE

End Of QE

U.S. Fed ends bond buying, exhibits confidence in U.S. recovery.  Full Article 

Samsung Results

Samsung Results

Smartphone woes drag Samsung Elec Q3 profit to more than 3-year low.  Full Article 

Refining Margins

Refining Margins

BPCL aims to double refining margins with refinery expansion.  Full Article 

Reuters India Mobile

Reuters India Mobile

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