The slowdown in the capex cycle and high interest rates are taking a toll on MF schemes that have bulk of their underlying assets in capital-intensive units.
According Value Research data, schemes that have more than 20% of their funds in the capital goods sector have lost between 15% and 20% in the last three months. Sundaram CAPEX Opportunities (G), which has nearly half of its funds in this sector, has suffered losses of 20.30% in the three-month period. The loss is even more severe over a six-month period at 28%.
However, the biggest loser during the period is Reliance Diversified Power Sector with a nearly 30% fall. In fact, the BSE Capital Goods Index has shed 31% in the current calendar year when the benchmark Sensex lost 4%.
Also, BHEL and L&T have reported 50% and 12.5% y-o-y decline in their net profits, respectively.
Apart from capital goods, funds tracking the oil & gas sector are also going through a rough patch with losses between 14% and 25% in the three-month period. Sundaram?s Energy Opportunities, which has invested more than 40% of its funds in this sector, has seen the value of its assets decline 18.15% and 21.41% in three-month and six-month period, respectively.
Experts feel the current investor sentiment is against the stocks tracked by these schemes. ?Investors are avoiding these sectors as they are highly dependent on government intervention. The huge debt burden is eating into the profitability of these companies,? said Sachin Jain, MF analyst, ICICI Direct.
Foreign brokerage Goldman Sachs, in a recent research note, said industrials ?look relatively more vulnerable to funding pressure given high leverage and low profitability.? Even macro-economic indicators are showing no signs of recovery. The index of industrial production (IIP) fell by 1.6% in May as the number of industry groups that recorded a fall in their output rose from 9 in April to 11 in May.