Technology funds top weekly returns

The rupee's depreciation against the dollar helped funds in the technology sector to attain the top rank among all fund categories in the week ended Friday. Technology funds with 0.25 per cent average return were the only ones to give positive returns among equity funds.

The local currency, which had appreciated 8 per cent since January, was down 1.4 per cent Friday from a week ago.

The weakness in global equity markets along with foreign institutional

selling in domestic markets pulled down the Sensex and Nifty 3.48 per cent and 3.54 per cent, respectively. This in turn pushed other fund categories into the negative.

Except for technology funds, all other equity fund categories have outperformed their respective benchmark indices. 

GOOD SHOW Weekly category-wise returns (%)
Equity funds
Fund category	01-Jun	08-Jun
Technology	0.86	0.25
Pharmaceuticals	5.02	-1.51
Banking	2.00	-2.25
Tax Planning	2.14	-2.65
Diversified	2.35	-2.81
FMCG	0.65	-3.27
Index	1.42	-3.37
Auto	2.31	-5.32
Gold ETF	0.96	0.19
Debt funds
Fund category	01-Jun	08-Jun
Short-term income	0.20	0.17
Medium-term income	0.16	0.13
Short-term floaters	0.15	0.13
Liquid funds	0.14	0.11
Long-term floaters	0.15	0.11
Short-term gilt	0.15	0.07
Medium & long-term gilt	0.24	-0.22

Out of the seven information technology funds, only Kotak Tech, with 1.45 per cent return, beat the CNX IT Index that rose 1.3 per cent. However, one of the technology schemes beat the BSE IT Index that ended up by 1.6 per cent.

Three technology funds ended the week in negative. DSPML Technology.com Fund, with a negative 1.1 per cent return, was the biggest loser.

The fall in the rupee also boosted the prices of gold and, in turn, improved returns of gold exchange traded funds.

Auto sector funds, with a 5.32 per cent average return, were the worst hit last week as shares of two-wheelers fell on reports that Hero Honda Motors, Bajaj Auto, and TVS Motor cut production due to lower demand on account of rising interest rates and the impending monsoon.

Also, disappointing vehicle sales figures for May have had an impact on these shares. JM Auto Sector Fund and UTI Auto Sector Fund gave 5.22 per cent and 5.42 per cent returns, respectively.

The weak trend in U.S. bond yields coupled with expectations of liquidity tightening measures by the Reserve Bank pulled down prices of Indian bonds, impacting long-term gilt schemes the most. This was the lone category to give negative returns in debt funds.

Abundant inter-bank liquidity pulled down call money rate to 0.25-0.35 per cent that resulted in a fall in collateralised borrowing lending obligation rates. In the absence of enough investment avenues, returns of liquid plans that shifted some corpus in cash, fell to 0.11 per cent from 0.14 per cent in the week before June 1.