Funds sees rangebound run next week

Fund managers expect a range-bound equity market next week. They will closely watch the October-December earnings for further trends in sectors, fund managers said Thursday.

They are upbeat on the prospects for banking and cement sectors.

Debt fund managers expect a lackluster market and are likely to raise cash levels in the portfolio. Fund managers said that in the short-term, it would difficult to predict the movement of the equity market.

"It is highly difficult to predict the market in short-term. However, in the medium-term, the equities will give around 15-20 per cent returns," Sanjay Dongre, fund manager, UTI MF, said.

JM Financial Mutual's chief executive officer Krishnamurthy Vijayan said, "The third (October-December) quarter results are good. The market rose sharply in November and December. So, the correction was expected to come at some point of time. Investors need to adopt cautious approach and invest for the long-term."

Vijayan feels that market will be range-bound next week.

Sethuram Iyer, chief investment officer, SBI Mutual Fund, said, "Markets will be range-bound but highly volatile next week. It will be difficult to predict the levels of the market."

Iyer feels that market will take cues from the third quarter results.

"The market will watch results next week. Till date, the companies have given mixed results. So it will watch more results to get a clear picture. We need to look at the results to know the sectors, which are likely to perform going forward." Iyer said.

Iyer feels that equity funds can give around 10-15 per cent returns in the next one year.

Fund managers are bullish on the cement and banking sectors next week.

"The results of the cement companies are good. Even the banks are expected to give good third quarter results," Iyer said.

UTI Mutual's Dongre also shares Iyer's optimism on the cement and banking sectors. "In the medium term, banking, cement and textile companies are expected to perform good," Dongre said.

JM Mutual's Vijayan is bullish on the oil and gas, automobile and healthcare sectors next week.

Debt fund managers do not expect much of action in the market even in the next week due to lack of any triggers.

"The debt market will be lackluster next week. It will remain sideways. The market will wait for events such as FOMC (Federal Open Market Committee Meeting), which is on February 2. Upward movement is quite limited. The ten-year will trade at around 6.70 per cent . I think, there will not be much movement in the market till the union budget," Ganti Murthy, fund manager at SBI Mutual, said.

Kaushal Singh, debt fund manager of Standard Chartered Mutual, also opined that there will not be much of movement in the market.

He said, "There will be not be much of activity in the market. It will remain range-bound till the announcement of auctions. The 10-year bond will trade in a range of 6.70-6.80 per cent yield"

Today at 1645 IST, the most actively traded 7.38 per cent , 2015 paper was trading at 6.7384 per cent yield.

Speaking on strategy for his funds, Murthy said, "we may sell the 10-year bond if there is a right price to offload. We are now raising the cash levels as there is not enough of short-term papers in the market," Murthy said.

Singh of Standard Chartered Mutual also said they will increase the cash levels in the portfolio. Singh said, "We will raise the cash levels in order to participate in the auction."