Pharmaceutical funds top one-week returns

Pharmaceutical funds topped the returns charts in the week to Thursday with average returns of 2.3 per cent, even beating the BSE Healthcare Index that rose 1.82 per cent.

Automobile funds were the worst hit with 3.2 per cent negative average returns, as the shares fell on concerns over a slowdown in demand for vehicles amid rising interest rates.

In equity fund categories, barring pharma and fast-moving consumer goods funds, rest all recorded negative average returns. On the debt side, only long-term gilt funds posted a decline in average returns owing to a rise in bond yields following the cash reserve ratio and repo rate hikes by the Reserve Bank of India.

Also, the rise in inflation rate pulled down long-term bond prices, and impacted returns of long-term schemes adversely. Short-term schemes, that have low mark-to-market component, managed to register positive average returns.

The best performing scheme was Reliance Pharma Fund with 3.05 per cent returns. Pharmaceutical shares rose last week on value buying and specific developments, boosting returns of sectoral funds.

Dr Reddy's Laboratories gained on reports that it may be able to market amlodipine besylate tablets in the US from April 12, when the drug goes off-patent.

In FMCG funds, the top performer was Franklin FMCG Fund with 1.27 per cent return. FMCG fund category, with 0.8 per cent average returns, beat the BSE FMCG Index that rose 0.48 per cent.

Technology shares declined owing to concerns over an appreciating rupee and its impact on earnings as most of the tech majors derive a chunk of their revenues from exports. The impact of slowdown in the US economy also weighed on the sentiment, pulling down technology shares and returns of IT funds.

But compared with 1.02 per cent decline in average returns, technology funds performed better than the BSE IT Index and CNX IT Index that fell 1.1 per cent and 1.76 per cent, respectively. The hike in repo rate and cash reserve ratio on March 30 after market hours led to a meltdown in bank shares on Monday.

The RBI hiked the repo rate by 25 basis points to 7.75 per cent with immediate effect and CRR by 50 basis points to 6.50 per cent. The CRR hike, which will drain Rs 155 billion from the banking system, will be implemented in two stages - Saturday and April 28.

Some banks are also likely to take a hit on their treasury portfolio for the March quarter owing to a near 50 basis points rise in the yield of the benchmark 10-year 8.07 per cent, 2017 gilt.

Over the week, the CNX Bank Index fell by 2.73 per cent, while banking funds registered 2.46 per cent decline in average returns. The Reliance Banking Sector Fund and the UTI Banking Sector Fund returns declined 2.27 per cent and 2.65 per cent, respectively.