Technology funds top returns; banking funds hit

Value buying in technology shares due to the weakening of rupee against the dollar boosted returns of technology schemes in the lastweek.

However, technology funds, with 2.34 per cent average return, could not beat the BSE IT Index and the CNX IT Index that rose 2.59 per cent and 2.55 per cent, respectively, in the week.

Irrespective of last week's fall in rupee, fund managers expressed concerns over rupee appreciation going forward and its impact on the earnings of software companies as they derive a major chunk of their revenues from exports.

Banking sector funds were the only equity fund category to record negative average returns last week.

Fall in ICICI Bank shares after its poor Jan-Mar results and plans of raising Rs 2000 crore via equity issue, pulled down shares of the banking major and in turn net asset values of banking funds.

On the debt side, the hardening of bond yields amid tight interbank liquidity and concerns over the scheduled gilt auction impacted returns of long-term schemes.

Liquid, short-term, and long-term floaters managed to show consistency in returns.

Sector funds
In technology schemes, top performers included ICICI Prudential Technology Fund, with 3.2 per cent return, followed by Kotak Technology Fund and DSPML Technology.com Fund that gave 2.64 per cent and 2.4 per cent returns, respectively.

Automobile sector funds were the next best performers fetching an average return of 1.57 per cent. In comparison, the BSE Auto Index rose 2.42 per cent. Last week, Maruti Udyog, Tata Motors, and Hyundai India Motors reported a better-than-expected growth in April sales.

April sales were higher due to new launches and discounts on existing models, in turn negating the effect of rising interest rates. Maruti Udyog posted a 17 per cent growth in sales and that of Tata Motors' passenger vehicle surged 26 per cent, leading to rally in shares.

In banking funds, while Reliance Banking Fund managed to post 0.41 per cent return, the category average return was pulled down by the UTI Banking Sector Fund that gave negative 1.81 per cent return.

Banking funds with 0.7 per cent negative average return, managed to outperform the CNX Bank Index that declined 1.67 per cent. ICICI Bank last week reported a mere 4 per cent rise from a year ago in Jan-Mar net profit to Rs 830 crore, dragging down the shares nearly 8.5 per cent over the week.

While Reliance Banking Fund, that manages assets worth Rs 114 crore, had invested 11.4 per cent of the corpus in ICICI Bank, UTI Banking Sector Fund, with Rs 6,470 crore assets under management, had deployed 26.24 per cent of the corpus in ICICI Bank.

Pharmaceuticals and fast moving consumer good funds with 1.41 per cent and 0.44 per cent average returns managed to outperform the BSE Healthcare Index that rose 1.33 per cent and the BSE FMCG Index that declined 0.53 per cent. 
 

HOW THEY FARED Category-wise returns of various fund categories:(in %)
Category	For week to May 4
Equity funds
Technology	2.34
Auto	1.57
Tax Planning	1.48
Diversified	1.42
Pharma	1.41
Index	0.60
FMCG	0.44
Banking	(-) 0.70
Debt
Liquid funds	0.16
Short-term floaters	0.15
Long-term floaters	0.15
Short-term gilt	0.14
Short-term income	0.13
Medium-term income	0.07
Long-term gilt	0.06

Equity, index funds
Index funds category posted 0.6 per cent average return last week compared with 0.18 per cent and 0.83 per cent rises in Sensex and Nifty, respectively. Nifty Junior BeES with 3.18 per cent return stood first among 22 index schemes.

Benchmark Mutual's Bank BeES was worst hit, posting 1.67 per cent negative return. The scheme, which invests in shares in the CNX Bank Index in the same proportion as that of index, suffered due to fall in banking shares. It was the only index scheme to end the week in the negative zone.

Out of 22 index funds, 15 beat Sensex and four could outperform Nifty. In diversified schemes, 165 gave higher returns than Sensex while 139 outperformed Nifty rise.

Among 171 diversified equity funds, top performers were Magnum COMMA Fund (3.61 per cent return), Tata Equity PE Fund (3.41 per cent), and Escorts Growth (3.16 per cent).

The funds that suffered were Birla Top 100 (-0.03 per cent return), HDFC India Sensex Plus (-0.07 per cent), and Lotus India Contra Fund (-0.10 per cent). These were the only schemes to give negative returns in diversified equity fund category.

Within tax-saving plans, Birla Equity Plan topped with 3.8 per cent returns, while Lotus India Tax Plan took a hit, recording 0.53 per cent return. All 29 equity-linked savings schemes beat Sensex while 24 could outperform the Nifty.

Debt
Bond prices declined last week due to concerns over interbank liquidity after the Reserve Bank of India hiked the ceiling on market stabilisation schemes to Rs 11,000 crore from Rs 9,500 crore .

Also concerns remained over the Rs 1000-crore gilt auction scheduled between May 4-11. Benchmark 10-year, 8.07 per cent, 2017 government bond closed at 8.1556 per cent yield-to-maturity or Rs 99.41, compared with 8.1425 per cent yield or Rs 99.50 a week ago.

The downward trend in bond prices resulted in long-term gilt schemes registering 0.06 per cent average return, least in debt fund categories. LICMF Government Securities Fund stood first among 42 schemes with 0.18 per cent return. Principal Government Securities Fund was worst impacted with 0.01 per cent negative return.

Liquid funds with low mark-to-market component managed to post stable returns. In 56 liquid plans, Sundaram BNP Paribas Liquid Plus was top performer with 0.22 per cent return followed by ICICI Prudential Liquid and ICICI Prudential Sweep that posted 0.19 per cent returns each.