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Globally focused equity funds fared relatively better with the rebound in some of the international markets. The equity global emerging markets and equity global categories returned 11.04% and 6.47%, respectively.
Gold exchange-traded funds continued to record strong gains, and pharmaceutical and information technology funds also fared well during the month. Bond funds delivered lacklustre returns with the rise in bond yields on the back of rising inflation and spiralling crude prices.
ôGlobal risk aversion continued to play with investor sentiment here in India,ö says Dhruva Raj Chatterji, a Mumbai-based research analyst at Lipper. ôThe budget too had some hiccups for the markets but was overall a balanced one. Inflation and global volatility remain concerns in the immediate term.ö
Foreign institutional investors (FII) bought $430 million worth of Indian equities last month, after a record net outflow in January, according to Lipper. With that, the net FII outflow now stands at $2.8 billion. Net inflows by domestic mutual funds totalled Rs5.14 billion last month.
ôSome amount of uncertainty remains on global liquidity, with risk aversion on the rise among investors,ö Chatterji says.
The recent Union Budget in India was a mixed bag, but it was balanced overall, he notes, adding that the hike in short-term capital gains tax from 10% to 15%, and the change in treatment of securities transaction tax to be set off as a business expense rather than against other taxes paid, have not been digested too well by the capital markets.
Domestically, the rise in inflation beyond the 5% mark raised concerns and questions about whether the Reserve Bank of India will actually go in for a rate cut any time soon, Cahtterji says.
ôInvestors seem to be gearing up for a global slowdown, with risk aversion on the rise,ö he notes. ôTime will tell if the projected slowdown in global growth led by the worldÆs largest economy will be a soft and short one or a sharp and lasting one.ö
Average February performance of fund groups registered for sale in India, by asset types:
Equity Global +6.47%
Bond USD +1.99%
Money Market INR +0.57%
Bond INR General +0.53%
Bond INR Government +0.03%
Mixed Asset Conservative -0.23%
Mixed Asset Aggressive -0.53%
Mixed Asset INR Balanced -0.81%
Mixed Asset Flexible -1.15%
Equity India -1.52%
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