India’s diversified equity funds posted their best monthly performance since Jan 2012 as the benchmark Sensex scaled record highs in October, with bets on sectors such as banking and capital goods boosting mutual fund returns.
Such schemes, which form the largest category of equity funds in India by number and assets, rose 9.2 percent on average, mirroring returns on the 30-share BSE Sensex, data from fund tracker Lipper, a Thomson Reuters company, showed.
The Sensex hit an all-time closing high in October — and went on to touch a life high on Nov. 1 ahead of the Diwali weekend — bolstered by foreign inflows of around $3.5 billion after the U.S. Fed decided to delay stimulus tapering.
“Liquidity has overtaken the economic scenarios, probably this is likely to continue for a couple of months,” said R.K. Gupta, managing director at Taurus Mutual Fund. “The outlook for mutual funds looks slightly better. Over a period of time, most of the mutual funds are taking care that profit booking is an ongoing exercise.”
Other than large-cap stocks, funds’ investment in smaller shares also paid off, as the BSE mid-cap index rose 9 percent while the small-cap index gained 7.9 percent. These stocks collectively accounted for more than a third of such funds’ assets by end-September, separate data from Morningstar India showed.