| NEW DELHI
NEW DELHI May 2 Indian equity funds focusing on
consumer goods and healthcare companies topped the performance
charts in April, and the country's struggling economy is set to
drive more investors to the defensive sectors.
Growth in Asia's third largest economy has been slowing,
fiscal and trade deficits have widened sharply and the inability
of the government to push key reforms such as cutting subsidies
and opening up the economy have dented investor confidence.
Still, in the country of more than 1.3 billion people demand
is seen strong for daily use consumer goods like soaps,
toiletries and food as well as pharmaceutical products.
"Consumption is on track and these sectors will continue to
do very well," said T P Raman, managing director of Sundaram
Mutual Fund. "All other sectors are impacted by one thing or the
Fast moving consumer goods (FMCG) funds gave an average
return of 8 percent in April, shining for a second consecutive
month, while healthcare funds chipped in 3.6 percent, data from
fund tracker Lipper, a Thomson Reuters company, showed.
The SBI Magnum Sector Funds Umbrella - FMCG fund was the
best performer, posting a 9 percent return in April.
(For a table of mutual fund returns in April, click on
The returns were better than the BSE FMCG index's
6.2 percent gain and the healthcare index's 2.6 percent
rise in April.
Shares in ITC, the largest cigarette maker in
India, surged 8.2 percent in April, while the leading consumer
goods maker Hindustan Unilever Ltd rose 1.8 percent.
Hindustan Unilever, which reported a 21 percent rise in
quarterly net profit on Tuesday helped by higher volumes and
prices, sees strong consumer demand continuing despite risk of
input cost pressures and currency fluctuations.
In comparison, the 30-share benchmark slipped 0.5
percent in April with investor sentiment undermined by
regulatory risks and lack of clarity about budget proposals to
tax foreign portfolio investments.
Standard & Poor's cut India rating outlook to negative from
stable, reflecting the toll that hefty fiscal and current
account deficits and political paralysis are exacting on the
India is faltering as an investment destination because of
significant policy mistakes and stock prices there will slide if
the nation's credit rating is cut, Mark Mobius, one of the
world's best-known emerging market investors, said on
DIVERSIFIED EQUITY, OTHER FUNDS
Diversified stock funds, the largest category of equity
funds in India by number and assets, fell nearly 1 percent in
April with their near 11 percent exposure to information
technology (IT) weighing down, data showed.
IT funds showed an average 4.4 percent drop in returns,
while the BSE IT index fell 6.2 percent, with Infosys
plummeting 14 percent and Wipro sliding 8
Financial services, which account for more than a fifth of
such funds assets and is the fund managers' top bet according to
Morningstar India data, posted small gains.
The BSE banking index rose 0.7 percent in April,
with investors cautious about the outlook and banks reluctant to
cut rates due to tight liquidity conditions after the central
bank slashed rates by 50 basis points.
Among other schemes, gold ETFs registered a rise of 2.8
percent as the yellow metal rose in April on the back of
uncertain global economic outlook.
India gold futures hit a five-month high of 29,293
rupees per 10 grams on May 1.
(Reporting by Aditya Kalra, editing by Ranjit Gangadharan)