The equity markets made a volte-face post the correction last month and registered a strong performance in February 2005. Most of the benchmark indices portrayed healthy gains as investors looked to make value picks at lower levels. The markets continued with their momentum on the last day of the month post the budget pronouncements.

"This trend clearly indicates that market participants were anticipating a favourable budget and that most budget pronouncements are being looked at favourably from a long term perspective," says Krishnan Sitaraman, head, financial sector, CRISIL.

The debt markets were largely stable with the 10-year benchmark yield moving slightly from 6.70 per cent at the beginning of the month to 6.55 per cent by the month end. For the mutual fund industry, the Budget proposed the launch of a new product in the form of mutual fund units linked to gold prices, which could be a good avenue to attract investors.

CRISIL FundServices' monthly risk adjusted return ranking (CRISIL~RRR) of the performance of mutual fund schemes, has ranked 188 schemes for February 2005 across ten categories. The CRISIL~RRR measures performance of the schemes based on the returns given by the schemes over the period of analysis as well as the risks they took to achieve those returns. The ranking universe covers most of the mutual fund investment options available to the investors. The CRISIL~RRR covered 70 per cent of the industry assets under management (AUM) in February 2005.

Equity funds: Returns move northwards.
The general equity category registered a complete turnaround over its weak performance last month, and ended the month well into positive territory. The CRISIL Fund~eX generated a monthly return of 4.96 per cent. Franklin India Prima Fund occupies the top slot at CRISIL~RRR 1 for February 2005, having moved up two notches. Sundaram Select Midcap and Birla Midcap Fund are at CRISIL~RRR 2 and CRISIL~RRR 3 respectively.

In the software sector, Birla India Opportunities Fund - Plan B maintained consistency in performance and was ranked CRISIL~RRR 1. Alliance New Millennium Fund and DSP Merrill Lynch Technology Fund were at CRISIL~RRR 2 and CRISIL~RRR 3 respectively.

Debt Funds: By and large stable, marginal improvement shown.
The income category was not volatile and returns moved up marginally on account of a fall in bond yields during the month. The CRISIL Fund~dX generated annualised monthly returns of 8.47 per cent in February 2005. The top performer in the category was HSBC Income Fund - Investment Plan at CRISIL~RRR 1, having moved up two notches over its previous ranking. Reliance Income Fund was at CRISIL~RRR 2 and HDFC High Interest Fund was at CRISIL~RRR 3.

In the debt-short term category, there were no changes in the ranking relative to January 2005. UTI Liquid Short Term Plan maintained consistency at CRISIL~RRR 1 and was followed by Principal Income Fund - Short Term Plan and Kotak Bond Short Term Plan at CRISIL~RRR 2 and CRISIL~RRR 3 respectively. The CRISIL STBEX, the benchmark for short-term income funds, generated annualised monthly returns of 6.47 per cent.

In the gilt-long category, the top performers were Reliance Gilt Securities Fund - Long Term Plan at CRISIL~RRR 1 and UTI Gilt Advantage Fund - Long Term Plan at CRISIL~RRR 2. UTI G-Sec Fund has moved up the charts to CRISIL~RRR 3. The CRISIL MF~Gilt Index generated an annualized monthly return of 9.24 per cent for February 2005.

The liquid fund category maintained consistency in performance, as reflected by the CRISIL~LX, which generated annualised monthly returns of 4.92 per cent. The top performers were UTI Liquid Advantage Fund at CRISIL~RRR 1, JM High Liquidity Fund at CRISIL~RRR 2, and Sundaram Money Fund at CRISIL~RRR 3.

The balanced fund category registered an impressive performance during the month, buoyed by the upsurge in the equity segment. The CRISIL Fund~bX generated a monthly return of 3.86 per cent for February 2005. DSP Merrill Lynch Balanced Fund moved up two notches to CRISIL~RRR 1. It was followed by Sundaram Balanced Fund and Tata Balanced Fund at CRISIL~RRR 2 and CRISIL~RRR 3 respectively.

The CRISIL MIPEX, the benchmark for monthly income plan schemes, registered a monthly return of 1.00 per cent. In the monthly income plan (MIP) category, the top performers were FT India Monthly Income Plan at CRISIL~RRR 1, Principal MIP - Growth Accumulation Plan at CRISIL~RRR 2, and DSP Merrill Lynch Savings Plus Fund - Moderate at CRISIL~RRR 3.

In the floating rate fund category, there was no change in the ranking for the top three schemes. HDFC Floating Rate Income Fund - Short Term Plan was at CRISIL~RRR 1, followed by Grindlays Floating Rate Fund at CRISIL~RRR 2, and Prudential ICICI Floating Rate Plan - Option B at CRISIL~RRR 3.