Funds see equities ranged ahead of Budget

Fund managers on Friday said the stock market will remain range-bound ahead of the Union Budget on February 28, and plan to adopt a wait and watch policy. Fund managers expect the debt market to be range-bound as well, and will maintain the present average maturity of the portfolio.

Speaking about the stock market, Jayesh Shroff, equity fund manager at BOB Mutual, said, "Next week, it will be very, very range-bound just a week before the union Budget. This is also the last week of F&O (future and options) settlement in the month."

Shroff sees the Sensex in the 6450-6650 range next week.

Friday, the Bombay Stock Exchange's Sensex closed at 6584.32, down 4.97 points over Thursday. The National Stock Exchange's Nifty settled at 2055.55, down 6.35 points.

"We will just wait and watch the market. Whatever action has to be taken will be taken only after the Union Budget," Shroff said.

N K Garg, chief investment officer, Sahara Mutual, said, "There are some events lined up next week. One is futures and options expiry and second is the Union Budget. Market will closely watch these events. Overall, sentiments are bullish in the market. The activity will be stock-specific and not sector-specific."

Speaking on the debt market, Garg said, "The debt market looks quite comfortable. There are some worries on the oil prices, but I strongly feel that it (global crude oil price) will fall below $40 per barrel."

"The inflation figure was lower than the market expected 5.10 per cent. So, sentiment will be positive in the market next week," Garg said.

The wholesale price index inflation for the week to Feb. 5 fell to 5.01 per cent from 5.25 per cent a weak ago due to the high base effect.

On Sahara Mutual's debt fund strategy, Garg said, "Our gilt fund maturity is 3.5 years, income fund's maturity is 2-2.5 years and liquid fund's maturity is 7-8 days. We will keep the maturity of the portfolio same next week."

"Whenever opportunity exists, we will adopt trading strategy," Garg said.

Dhawal Dalal, fund manager-fixed income at DSP Merrill Lynch Mutual, also expects the debt market to be range-bound.

"Next week the market will be slightly range-bound. The ten-year bond will trade in the range of 6.4-6.5 per cent yield. Out core position is to do trading as and when the opportunity is available," he said.

At 1659 IST, the actively watched 7.38 per cent, 2015 bond was traded at 6.4944 per cent yield, compared with 6.5072 per cent Thursday.

Next week, the fund industry will witness the launch of one pure debt fund and one mid-cap fund.

On Monday, Prudential ICICI Mutual will launch Prudential ICICI Debt Plan-Series I. The issue closes Thursday.

Also on Monday, SBI Mutual will launch a mid-cap fund. The fund house plans to raise Rs 800-900 crore from the issue that closes on March 17.

JM Financial Mutual's arbitrage product, JM Equity and Derivatives Fund, closes on Monday. The scheme expects to mop up over Rs 500 crore.

The initial offer of LIC Mutual's LICMF Opportunities Fund will also close Monday. The issue had opened on January 31.

Canbank Mutual's floater and mid-cap offerings will close on February 22 and February 23, respectively. It expects to raise Rs 100 crore from the floater.

The initial offering of Principal Focussed Advantage Fund, launched on January 31, will close on February 24.

Birla Sun Life Mutual's 13-month fixed maturity plan issue will close on February 25. The issue had opened on January 29.