Banking funds top weekly chart

The funds yield 4% vs tech funds' 1.84% and bourses funds' 0.85%.

Banking sector mutual funds were able to reap rich dividends "� beating other sectoral funds "� from the recent bull run in banking stocks.

Banking funds, with slightly over 4 per cent returns, topped the last week's performance chart, while other sector-specific funds "� invested in auto, fast-moving consumer goods and pharmaceuticals "� yielded negative returns.

For the week ended last Friday, banking funds yielded 4.01 per cent returns compared with 1.84 per cent by technology funds and 0.85 per cent by index funds. Other sectoral equity investment funds saw negative returns.

Pharma funds were the biggest losers with -2.33 per cent, followed by FMCG funds (-2.31 per cent) and auto funds (-2.10 per cent), according to a data released by Value Research.

Last week, the Bankex outperformed the benchmark index to scale a new high. The Bankex gained 4.87 per cent or 330.99 points to settle at 7124.85. In comparison, the Sensex, which is trading at lifetime high levels, nudged up only 0.22 per cent.

Mutual fund house Benchmark's Bank BEES fund was the top performer of the week with a return of 6.21 per cent, followed by UTI Thematic Banking Sector Fund's growth and dividend schemes, which yielded returns of 5.92 per cent and 5.81 per cent respectively, as per fund-tracking website mutualfundsindia.com. Reliance Banking fund's growth (2.10 per cent) and dividend (2.09 per cent) schemes stood at the ninth and the tenth positions.

However, analysts are of the view that Reserve Bank of India's new draft guidelines limiting banks' exposure to capital markets could affect banking stocks in the near future.

"We believe that new norms are mildly negative for the banking sector as it will narrow down advances to the capital markets, booming at this moment. The banking stocks with high exposure to capital markets could be impacted by these norms," Emkay Shares & Stock Brokers said in its report.