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Growth funds get crude shock

Sep 19, 2000

Crude concerns have hit equity markets in a big way, and this is more than evident in the 400+ point slide in the BSE Sensex over the past few days. The impact on (equity) growth funds has been depressing to say the least. Rising crude oil prices in the global market is a concern afflicting all equity markets, and India has been no exception to this. So while ten days ago, domestic markets were inching upwards of 4,700 points, the surge in crude prices has spoilt the party and markets did not take long to forfeit all their gains in a matter of days.

As is the case with all bear and bull runs, software stocks led the charge once again, this time on their way down. And given the heavy exposure to software stocks by ‘diversified’ growth funds, net asset values (NAVs) of these funds have slumped dramatically.

Open-ended, Growth Schemes NAV
(Rs)
Last
week
Last
month
Last
year
Since
inception
BSE - 30 - 0.9% 7.4% 0.2% -
S&P CNX Nifty - 0.4% 6.5% 4.9% -
S&P CNX 500 - -0.2% 9.1% 7.3% -
Magnum Multiplier Plus 1993 23.9 4.7% 32.1% 28.6% 14.1%
GIC Growth Plus II 17.2 2.0% 9.0% 26.6% 10.2%
GIC Fortune 1994 7.0 0.9% 9.2% -11.1% -5.3%
Primary Equity Fund 16.2 0.5% 6.3% 3.8% 9.4%
GIC D'MAT 8.5 0.0% 6.0% -23.5% -25.1%
K MNC 10.3 -1.4% 1.7% 0.0% 10.4%
Reliance Vision Fund 19.5 -1.5% 1.8% 12.7% 14.1%
Templeton Growth Fund 12.9 -1.8% 2.4% 24.3% 9.6%
Mastergain 1992 12.1 -1.9% 8.5% -9.9% 3.9%
Zurich(I) Capital Builder 13.0 -1.9% 2.4% -6.3% 5.0%
Mastershare Plus 1991 22.9 -2.2% 4.2% -10.2% 5.5%
K P Prima Fund (Gr) 23.1 -2.6% 8.9% 5.7% 13.2%
Birla MNC Fund (Gr) 32.0 -2.7% 3.1% 65.4% 21.7%
Pru ICICI Growth (Gr) 24.3 -2.8% 13.2% 29.8% 48.6%
Grandmaster 1993 10.9 -2.9% 11.1% -17.1% 0.3%
DSP ML Equity Fund 18.7 -3.1% 3.1% 3.0% 29.0%
Boinanza Exclusive Gr 7.5 -3.1% 2.9% -19.2% -2.5%
Canbonus 10.5 -3.1% 6.2% -18.5% 2.9%
Canexpo 19.4 -3.5% 6.0% 21.9% 13.0%
Alliance Equity Fund (Gr) 39.5 -3.6% 10.8% 68.1% 94.4%
Birla Advantage Fund 41.9 -3.7% 8.0% 47.6% 35.8%
K P Bluechip (Gr) 23.7 -3.9% 4.4% 38.5% 30.2%
Franklin India (Gr) 7.4 -3.9% 2.9% 0.0% -28.1%
Mastergrowth 1993 19.2 -4.0% 5.1% 1.7% 10.1%
K 30 19.4 -4.1% 5.2% 23.3% 43.0%
DSP ML Opportunities (Gr) 9.7 -4.4% 7.1% 0.0% 8.9%
JM Equity Fund (Gr) 11.6 -4.4% 6.6% -3.8% 3.4%
UGS 10000 11.5 -4.5% 1.1% -15.5% 8.0%
IDBI Equity Fund (Gr) 11.6 -4.5% 8.1% -2.2% 4.0%
Canglobal 7.6 -4.6% 6.2% -22.2% 6.5%
Tata Pure Equity 13.8 -4.7% 6.2% 39.1% 49.5%
Taurus Starshare 9.6 -4.9% 6.0% 4.0% -1.7%
Zurich(I) Equity (Gr) 20.6 -5.1% 5.5% 19.3% 14.6%
Libra Leap 20.6 -5.2% 4.8% 33.1% 33.7%
Sundaram Growth 14.4 -5.3% 6.8% 13.1% 24.0%
IL&FS Gr & Val (Gr) 14.4 -5.4% 6.4% 0.0% 18.8%
Sun F & C Value (Gr) 22.0 -5.7% 5.5% 5.8% 32.2%
Zurich (I) Top 200 16.0 -5.7% 3.8% -12.4% 18.3%
K P Prima Plus (Gr) 22.5 -6.0% 0.4% 20.6% 16.6%
ING Growth (Gr) 19.4 -6.1% 11.6% 61.6% 65.9%
Magnum Global Fund 12.3 -7.3% 9.4% -0.8% 5.8%
Sun F&C Emerg Tech (Gr) 6.8 -7.7% 3.8% 0.0% -21.1%
Magnum Equity Fund 16.2 -8.4% 17.0% 27.7% 17.0%

Crude concerns are unlikely to vanish into thin air, which implies that the current slide is unlikely to reverse overnight. However, given the level at which some software stocks find themselves, bargain hunters (including fund managers) could lead a buying frenzy in these stocks, unless they see a further diminution in prices, in which case we could be witnessing a rather protracted ‘bearish’ phase.

Serious investors are better off staying invested rather than exiting at this moment, as there a consensus among fund managers about the solidity of fundamentals as far as software stocks are concerned. Smarter investors could opt for the systematic investment plans (SIPs) and actually ride the market slide.


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