Tech funds top returns in Jan

Technology funds with 6.31 per cent average returns topped the chart in January, beating both the CNX IT Index and the BSE IT Index that rose 1.87 per cent and 0.47 per cent, respectively. All scheme categories ended the month with positive returns.

In January, government allowed the Reserve Bank of India to fix the floor limit on banks' statutory liquidity ratio, currently at 25 per cent.

Banking stocks rallied as market participants believed at that time that this move will lead to more funds in banks' kitty for lending. As a result, banking funds came second, with 3.58 per cent average return.

In the debt market, expectations of a rate hike in RBI's monetary policy review heightened after inflation topped 6 per cent.

However, contrary to expectations, the central bank raised only the repo rate, keeping reverse repo rate unchanged.

It also said there was no need to cut banks' statutory liquidity ratio. This led to softening of bond yields, favouring debt funds, which ended the month on a positive note.

Technology shares followed broad market trend taking cue from the October-December earnings.

While market leader Infosys Technologies posted 51 per cent year-on-year rise in net profit, others like Tata Consultancy Services and Wipro as well as mid cap IT stocks like HCL Technologies also delivered robust results.

Earnings were strong despite appreciation in the rupee against major currencies last quarter, which led to a rally in select IT shares.

Magnum IT Fund registered spectacular return of 11.06 per cent. This was followed by Prudential ICICI Technology Fund and DSPML Technology.com Fund, that fetched 8.04 per cent and 7.64 per cent returns, respectively.

Kotak Tech Fund, however, under-performed""recording 1.13 per cent returns.

Banking funds""with 3.58 per cent average monthly returns""performed better, compared with benchmark CNX Bankex Index that fell 0.90 per cent.

Among banking funds, UTI Banking Sector gave 3.71 per cent returns, while Reliance Banking Fund delivered 3.45% return.

Compared with the 1.45 per cent fall in the BSE FMCG Index, FMCG funds posted average return of 1.57 per cent.

Auto funds""with 0.92 per cent average return""scored much better than the 0.06 per centfall in the BSE Auto Index.

Pharmaceutical sector funds recorded lowest average returns among equity funds, but beat the BSE Healthcare Index, which rose 0.32 per cent.

Reliance Pharma Fund was the top performer, posting 1.29 per cent returns. Magnum Pharma Fund fared worst with 0.22 per cent returns.