Mutual Fund Roundup: January 2010
Feb 08, 2010

Author: PersonalFN Content & Research Team

Mutual Fund Roundup: January 2010

Market Overview

The equity markets closed in the negative terrain in the month of January 2010. BSE Sensex lost 6.3% while the midcap index (CNX Midcap) lost 3.1% during the month. Gold too, ended in the negative terrain (2.4%).

Monthly Market Roundup

	Close	Change	% Change
BSE Sensex	16,358.0	(1,106.9)	-6.3%
S&P CNX Nifty	4,882.1	(319.0)	-6.1%
CNX Midcap	7,201.9	(231.0)	-3.1%
Gold (Rs/10 gram)	16,285.0	(405.0)	-2.4%
Re/US $	46.4	0.2	0.4%
Crude Oil ($/BBL)	71.6	(5.9)	-7.6%
10-Yr G-Sec (%)	7.6	(0.1)	-1.4%
1-Yr FDs	6.00% - 7.50%

(Monthly change as on January 29, 2010)

The graph below shows that FIIs were net sellers in equities to the tune of Rs 1,464 m in the month of January 2010 as compared to net buyers of Rs 95,030 m in the month of December 2009.

BSE Sensex vs FII inflows

(Source: ACE MF)

The inflation as measured by the Wholesale Price Index (WPI) touched a 13 month high of 7.31% in the month of December 2009, up from 4.78% in the previous month. The food inflation touched 17.56% for the week ended January 23, 2010. This spiralling inflation was one of the reasons to increase Cash Reserve Ratio (CRR) by 75 basis points from 5% to 5.75%, by Reserve Bank of India (RBI) in its third quarter monetary policy review 2009-10 on January 29, 2010. RBI also raised its March 2010 projection of inflation from 6.5% to 8.5% year on year. Many economists are estimating inflation to touch double-digits by March 2010.

BSE Sensex vs MF inflows

(Source: ACE MF)

Mutual Funds (MFs) were net sellers of equities to the tune of Rs 15,634 in the month of January 2010 as compared to Rs 8,273 m in the month of December 2009.

Monthly top gainers: Open-ended equity funds

Diversified Equity Funds	1-Mth	Balanced Funds	1-Mth	Banking Funds	1-Mth
JM Large Cap (G)	-7.12%	JM Balanced (G)	-4.11%	Religare AGILE (G)	-8.95
Sundaram Growth (G)	-6.41%	Sundaram Balanced (G)	-4.04%	Birla SL Intl. Equity (G)	-7.57
Birla SL Adv (D)	-6.11%	Birla SL Freedom (G)	-3.75%	Fortis China-India (G)	-6.25

(Source: ACE MF)
(1-Mth returns as on January 29, 2010)

Monthly top gainers: Open-ended debt funds

Monthly Income Plans	1-Mth	Long-Term Floating Rate Funds	1-Mth	Short-Term Gilt funds	1-Mth
Edelweiss GILT (G)	2.63%	Templeton Income Opp. (G)	1.28%	DWS Treasury-Invest (G)	0.54%
Escorts Gilt (G)	1.22%	SBI Dynamic Bond (G)	0.94%	Fortis Overnight (G)	0.51%
HDFC Gilt-ST (G)	1.05%	DWS Premier Bond (G)	0.93%	JM Money Mgr-Super (G)	0.49%

(Source: ACE MF) (1-Mth returns as on January 29, 2010)

The net investments in debt mutual funds witnessed an increase in the month of January 2010 as compared to December 2009. The net investments increased from Rs 2,22.54 mn to Rs 3,122.39 mn.

Performance across various categories of mutual funds

(1-Mth average returns of funds in various categories as on January 29, 2010)
(Source: ACE MF)

As per the above graph, the returns of all equity oriented funds were in the negative terrain, the top losers were Equity Index funds. Debt funds performed comparatively better and closed in the positive terrain.

Other News

The Association of Mutual Funds in India (AMFI) has banned 4 mutual fund distributors for mis-selling mutual funds to the investors. The AMFI Chairman, said “some distributors were carrying on fraudulent activities due to which investors were suffering losses. After seeking explanation from the distributors, we immediately suspended them”.
The insurance companies have been asked to explain as to why they have not taken SEBI’s approval before selling ULIPs. SEBI’s contention is that, ULIPs raise money from the public and the money is invested in a fund chosen by public and the valuation is through the Net Asset Value (NAV) methodology, which is unitised fund value. Thus having characteristics akin to mutual fund schemes, ULIP’s should come under SEBI’s jurisdiction.
With effect from April 1, 2010 all financial transactions without a Permanent Account Number (PAN), will attract more tax. The government announced that higher of the prescribed rate or 20%, will be deducted on all transactions liable to tax deduction at source (TDS), where the PAN of the assessee is not available.