As Indian benchmark indices touched its all-time high on Thursday, banking equity funds managed to outperform all the equity fund categories in the last one year. While Sensex and S&P CNX Nifty gave one year returns of over 24%, banking gave 64%, Valueresearch data shows. Market participants said with Indian economy poised to grow at approximately 8% per annum in the coming years, banking sector will be the best bet continuing to beat the broad market index.
Sunil Singhania, head equities at Reliance MF said, ?We are under-banked and under-leveraged country and the growth potential for banking sectors looks promising considering that banking earnings grow roughly at twice the pace of the Indian economy.? Currently, there are 12 banking equity funds in the industry with over 2,200 crore of assets.
Reliance Banking Retail fund managed by Singhania gave a return of 77%, highest for the category. All the banking funds have given a return in the range of 55-77% in the last one year. Even in the last five years, banking funds have managed to beat the benchmark index giving returns of over 30% per annum.
Not only the banking funds, but pharma, FMCG, technology and infrastructure have also outperformed the Sensex and Nifty. ?Pharma and FMCG are defensive sectors, so during the lean phase in 2008-09, they were able to provide steady returns,? said a CEO of the leading fund house. Technology fund gave returns of over 15%, while pharma fund provided returns of 53% in a year. ?Despite sectoral fund being volatile in nature, if investors take a long-term view on the banking and FMCG sectors, they are likely to get a decent returns of over 15-20%,? said a fund manager from top fund house.