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FMCG, Media and MNC Funds rule the roost in June
July 8, 2010

The FEFI June 2010 Update


Author : iFAST Research Team



Untitled Document

Markets end June  in green

The SENSEX and NIFTY closed June with gains of 4.46% and 4.45% respectively. Most of the broad indices including the midcap indices gave returns in the range of 4.22% to 4.60% for June. However, the BSE Small cap Index gave returns of 6.13% in June. 

FEFI PERFORMANCE UPDATE

FEFI began  June  at 1815.96 points and closed June gaining 89.3 points (4.82%) on a month-on-month basis to 1939.64 points. FEFI showed an upward trend for June except for a few days around 9 June 2010, where the index fell to 1828 points before recovering and closing at the month’s high  of 1939.67 points. Considering the performance of the market indices and FEFI, we think that the equity fund managers have done a good job in managing the equity funds in June.

Chart 1: FEFI Performance for 2010


Table 1: FEFI Index levels

FEFI

Year-to-date (%)

Month-to-date (%)

31 December 2009 1831.56 - -
31 January 2010 1763.09 - -3.7%
28 February 2010 1745.48 -4.7% -1.0%
31 March 2010 1868.57 2.02% 7.05%
30 April 2010 1916.83 2.58% 4.66%
31 May 2010 1850.36 1.03% -3.47%
30 June 2010 1939.67 5.90% 4.83%

Table 2: Top 5 Equity funds on our platform in June

  Sector

MTD Returns

YTD Returns

ICICI PRUDENTIAL FMCG FUND - GROWTH FMCG 13.82% 15.75%
RELIANCE MEDIA & ENTERTAINMENT FUND GROWTH PLAN- GROWTH Specialty 11.02% 10.35%
UTI MNC FUND- GROWTH Specialty 8.28% 14.36%
SUNDARAM BNP PARIBAS SELECT THEMATIC FUNDS ENTERTAINMENT OPPORTUNITIES- GROWTH Specialty 8.05% 3.21%
BSL MNC FUND- GROWTH Specialty 7.94% 21.14%

Funds focussing on FMCG, Media and MNC companies have performed extremely well in June.  The BSE FMCG Index rose by 8.38%, consequently the ICICI Prudential FMCG Fund performed extremely well in comparison to the FMCG Index. The FMCG sector was a good performer in June primarily on expectations of good monsoons and the expected increase in the income of rural India that follows a good monsoon.

India has only two funds focusing on the Media and Entertainment sector. Both of these funds were in the top performers list as media sector stocks rallied after the Telecom Regulatory Authority of India (TRAI) recommended that the foreign investment limit for broadcast carriage services such as Direct To Home (DTH), IPTV, Mobile TV, and Multi System Operators (MSOs) may be raised to 74% from the current 49% and for FM radio companies from 20% to 26%.

The funds that focus on investing in MNC companies have also performed very well thanks to the rally in a few MNC companies stocks based on expectations in the market that these MNC companies will soon delist to comply with the new listing norms of the government. The new listing norms make it compulsory for listed companies to float at least 25% of their shareholdings. Most MNCs aren’t willing to part with 25% of the shareholding as it leads to dilution of the control being held by the MNCs’ parent companies. As a response to the expectations in the market already , the Board of Directors of 3 MNCs have approved  delisting from the stock exchanges.

Table 3: Bottom 5 Equity funds on our platform in June

Overseas funds in general and overseas commodity stock funds in particular have performed poorly in June as the commodity stock prices fell on renewed fears of sustainability of China’s  growth. The conference board revised the value downwards for leading indicator of China for the month of April from 1.7% to 0.3% resulting in these fears.  The deterioration in U.S. consumer  confidence along with China fears have led to concerns regarding the strength of the global economic recovery. The appreciation in Rupee by 0.18% could not stop the decline in performance of the overseas commodity stock funds.

Related Articles

Fund managers beat markets again in May 2010
Mutual Funds outperform equity markets in April
FEFI Closes FY 2009-2010 with a Bang!
Small and Mid-cap funds underperform FEFI in February 2010
FEFI falls 3.7% in January 2010
FSM All-Equity Fund Index (FEFI) rises 83% in 2009
FEFI rises again after a blip in October
FEFI Update - October
FEFI index methodology.

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iFAST and/or its content and research team’s licensed representatives may own or have positions in the mutual funds of any of the Asset Management Company mentioned or referred to in the article, and may from time to time add or dispose of, or be materially interested in any such. This article is not to be construed as an offer or solicitation for the subscription, purchase or sale of any mutual fund. No investment decision should be taken without first viewing a mutual fund's offer document/scheme additional information/scheme information document. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Investors should seek for professional investment, tax, and legal advice before making an investment or any other decision. Past performance and any forecast is not necessarily indicative of the future or likely performance of the mutual fund. The value of mutual funds and the income from them may fall as well as rise. Opinions expressed herein are subject to change without notice. Please read our disclaimer in the website.

 


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