Indian Stock Funds Gain Profits in June Since Jan, Outlook Improves

The diversified stock funds of India have got strong returns in June, reversing a bleak performance in May. The outlook has improved, scoring big gains in the capital goods and financial sectors. The fresh measures to ease the euro zone crisis and the government taking decision to put clarity on a tax proposal had panicked foreign investors, who helped pushing the benchmark BSE index up 7.5% in June to a near 2-month high.

According to a fund tracker, Thomson Reuters company, diversified equity funds that form the largest category of mutual funds in India by number as well as assets, returned an average 6.01% in June from 5.65% in May.

According to one of the officials from Taurus Mutual fund, the outlook has improved over previous months. Worries about slowing growth and lower stock valuations, prompted brokerages like JP Morgan and Deutsche Bank to upgrade Indian stocks during the month, despite being threatened by rating agencies like Standard & Poor’s and Fitch to downgrade India’s rating.

According to Morningstar India, sectors like bank and capital goods boost gains. The shares in India’s biggest engineering conglomerate, Larsen & Tourbo gained 19%, while Bharat Heavy Electrical Ltd gained 9.6% for the month. The data also shows mutual funds held 41% of their assets in Mid and Small cap stocks by the end of May.

It shows that, India’s top performing funds in June have returned more than 10% which includes UTI Banking Sector Fund and Goldman Sachs Infrastructure Exchange Traded scheme. Fixed income funds that invest in government securities generated 0.9% returns, while gold ETFs ended almost flat.

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