Mumbai: The pre election rally in the Indian stock market has changed the fortunes of investors in mutual funds as a couple of schemes, which had remained underperformers during the past two years, have now emerged as best performing schemes in the last one month.
The data available with Value Research, a mutual fund tracking firm showed that schemes focused on banking, infrastructure and mid and small cap stocks have emerged top performers while technology, pharma and international equity focused funds, which were the top performers in last two years have been relegated to the bottom of the pyramid.
While equity schemes focused on banking and infrastructure have rewarded investors with an average return of 13.11 per cent and 9.40 per cent respectively during the past one month, technology and international oriented equity funds have seen their portfolio value drop by 7 per cent and 2.39 per cent respectively.
According to experts tracking the markets, investors have started reallocating capital towards domestic cyclical sectors like infrastructure, capital goods and financials expecting a stable government at the center after the Lok Sabha elections.
“Capital is shifting from export oriented sectors to domestic cyclical sectors,” observed Surajit Misra, national head, mutual fund, Bajaj Capital.
According to Mr Misra, the domestic cyclical sectors have grossly underperformed the market during the past two years and what we are seeing is a mild recovery following improved risk appetite among investors.
“For cyclical sectors, the best is yet to come as many stocks in the capital goods and infrastructure sectors are still trading at a discount of 60-70 per cent from their life time high. If we get a stable government, which carry forward the slew of measures that the current government had taken in recent months like clearance of big ticket projects, then we could see these sectors giving stellar returns,” he added.
Gopal Agrawal, equity fund manager at Mirae Asset Mutual Fund pointed out that domestic fund managers have reallocated around 5-6 per cent of equity assets towards domestic cyclical sectors from sectors like IT and pharma in the last two months.
