* Worst monthly fall since Oct '08 for diversified stx
* Fall in key stock indices hurts performance
* High exposure to financials, energy weighed
By Aditya Kalra
NEW DELHI, Feb 2 India's diversified stock
funds mirrored losses in the benchmark index in January with
unit values recording their worst monthly performance since
October 2008, data from global fund tracker Lipper showed.
Such funds, which form the largest category of equity
schemes by number and assets, posted an average drop of 9.8
percent in the month, compared with a 10.6 percent fall in the
30-share benchmark Sensex .BSESN.
"Mid & small cap funds and infrastructure themed funds were
the biggest losers during the month, with these two segments
losing investor appeal in January," said Dhruva Raj Chatterji,
senior research analyst at Morningstar India.
For a category-wise return of funds, click [ID:nSGE71103C].
High inflation and fears of further rate hikes dented
investor sentiment and led to a sharp fall in key stock
indices, as foreign funds pulled out $1.4 billion from Indian
equities in January. [ID:nSGE70U09F]
Higher exposure to small and mid-cap counters also affected
unit values, as diversified equity funds had more than a third
of their assets invested in such companies as of December-end,
Morningstar India data showed.
Shares of such firms fell more than their larger peers in
January, with the BSE mid-cap index .BSEMC losing 12 percent,
and the small-cap index .BSESC recording a drop of 12.3
percent during the month.
Exposure to sectors like financials and energy, which
together accounted for more than 30 percent of diversified
equity fund assets, also hurt funds performance, data showed.
The country's top lenders SBI and ICICI beat estimates in
third quarter results, but rising rates in India are likely to
dampen the outlook for earnings growth in the near term.
The BSE Banking index .BSEBANK fell 9.8 percent in
January, while the oil & gas index .BSEOIL dropped 10.6
"It has been a broad-based fall in markets which has
affected funds," said R.K. Gupta, managing director of Taurus
Mutual Fund. "This is a catch-22 situation for the fund
BOND, GOLD FUNDS
Indian fixed income funds investing in government debt saw
net values rise 0.16 percent in January, as yields eased after
the central bank's policy review in the last week of the month.
"Policy was not as hawkish as some people were expecting,
so the bond yields fell ... that led to the positive return,"
said Mahendra Jajoo, head of fixed income, Primerica Asset
The central bank matched expectations with a 25 basis-point
rise in rates on Jan. 25, rather than the 50 basis-point
increase some investors had expected. [ID:nSGE70O07R]
For the month, the yield on the actively traded 8.13
percent, 2022 bond IN081322G=CC rose 14 basis points in the
month while the less liquid benchmark 10-year bond yield
IN078020G=CC was up 23 basis points.
India's gold exchange-traded funds (ETFs) fell 3 percent
in the month as yellow metal prices fell on waning safe-haven
appeal due to improvement in U.S. data.
On the continuous charts, gold futures MAUc1 ended
January at 19,922 rupees per 10 grams, down 3.9 percent for the
(Aditional reporting by Neha D'Silva and Siddesh Mayenker,
Editing by Ramya Venugopal)