Diversified equity funds rise in April, gold ETFs struggle

NEW DELHI Thu May 2, 2013 12:17pm 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


Border Security Force (BSF) soldiers ride their camels as they rehearse for the "Beating the Retreat" ceremony in New Delhi January 27, 2015. REUTERS/Ahmad Masood

"Beating The Retreat" Rehearsals

Rehearsals are on for "Beating the Retreat" ceremony which symbolises retreat after a day on the battlefield, and marks the official end of the Republic Day celebrations.  Slideshow 

NEW DELHI (Reuters) - India's diversified stock mutual funds outperformed the broader market marginally in April, with high exposure to financial services stocks supporting unit values, data from fund tracker Lipper showed.

Hopes that India's current account deficit would narrow after commodity prices eased in April boosted shares, with the BSE Sensex rising 3.5 percent to its highest close in 1-1/2 months.

However, diversified stock funds returned almost 4 percent on an average during the same period, underpinned by high exposure to financial services sector as these stocks rose on increased hopes of an interest rate cut by the Reserve Bank of India (RBI).

A Reuters poll showed that the RBI is likely to cut its key policy rate for a third time this year on Friday, drawing comfort from easing inflation and commodity prices as the central bank seeks to rescue the sagging economy.

"I think 25 bps is already factored in and if by any stroke of luck RBI gives 50 bps, then the markets should rise another 3-5 percent from here," said Waqar Naqvi, CEO at Taurus Mutual Fund, adding that the chances of a rate cut have never been this bright.

The financial sector continued to be Indian money managers' favourite sectoral bet as it accounted for 25.7 percent of such funds' assets as of end-March, separate data from Morningstar India showed.

The BSE banking index rose 10.2 percent in April, with stocks such as ICICI Bank (ICBK.NS) gaining 11.3 percent, while smaller players like Yes Bank (YESB.NS) surged 17 percent.

Fund managers' bets on sectors such as capital goods and fast moving consumer goods(FMCG) also paid off, as the BSE capital goods index rose 7.8 percent, while the FMCG index registered gains of 10.6 percent.

Among equity sectoral schemes, IT funds disappointed and ended with average losses of 11.8 percent as lower revenue forecast from companies such as Infosys (INFY.NS) and Wipro (WIPR.NS), and worries about higher U.S. visa costs dented sentiments.

Banking sector funds gained nearly 8.5 percent.


India's gold exchange traded funds (ETFs) fell more than 8 percent on an average in April, pushing the category among the worst performers' list, as yellow metal prices nosedived during the month.

Investors around the world shunned the commodity, usually considered a safe-haven asset, after gold prices dropped to two-year lows on fears of central bank sales and less monetary stimulus.

Gold futures listed on the Multi Commodity Exchange ended April with losses of 8.5 percent at 26,905 rupees/10 grams, after hitting a low of 25,270 rupees, a level last seen in September 2011.

Despite the recent fall, some experts believe that gold still makes for an attractive investment.

"Gold will definitely bounce back ... I will still allocate 10-15 percent of my personal money to gold," Naqvi of Taurus Mutual Fund said.

(Reporting by Aditya Kalra; Editing by Jijo Jacob)


After wave of QE, onus shifts to leaders to boost economy

DAVOS, Switzerland - Central banks have done their best to rescue the world economy by printing money and politicians must now act fast to enact structural reforms and pro-investment policies to boost growth, central bankers said on Saturday.

Reuters Showcase

Vodafone Ruling

Vodafone Ruling

Government will not appeal Vodafone tax ruling   Full Article 

Indian Railways

Indian Railways

Private refiners compete with state firm to sell diesel to railways   Full Article 

Ranbaxy Results

Ranbaxy Results

Dec-quarter net loss widens on forex loss  Full Article 

Market Eye

Market Eye

Sensex, Nifty retreat from record highs on profit-taking.  Full Article 

Tech Talk

Tech Talk

Apple takes high road in China smartphone standoff with Xiaomi.  Full Article 

Business Strategy

Business Strategy

Uber scraps commissions for its New Delhi taxis.  Full Article 

Job Cuts

Job Cuts

Sony to cut 1,000 jobs in smartphone business - sources.  Full Article 

Reuters India Mobile

Reuters India Mobile

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