Equity fund net asset values rose for a second straight month in December on the back of a broadbased market rally triggered by healthy second-quarter results, analysts said on Thursday.

Average NAVs of 173 funds investing in sectors ranging from technology to petrochemicals rose between 0.01 per cent and 6.14 per cent in December, data collected by fund tracking firm Value Research showed. That compared with a 4.6 per cent jump on the benchmark Bombay Stock Exchange index.

"The markets' rise has been pretty broadbased and almost all sectors have participated," IL&FS Ltd group investment strategist Vibhav Kapoor said. "The markets were undervalued and results for the July-September quarter were good," he added.

Prospects for coming months hinged on investor hopes for the 2003-04 budget to be presented in late February. "Markets in January and February will depend upon the buildup of budget expectations," said K B Capital Markets director Kaushik Poddar.

Domestic stocks touched a seven-month high in December as investors latched onto leading companies such as software exporter Infosys Technologies Ltd and petrochemicals giant Reliance Industries Ltd.

State-run companies on India's privatisation list firmed after the government said it would offload large stakes in two-cash rich oil refiners even though it set no timeframe.

Banking shares were re-rated after a new federal law armed lenders with more teeth to recover bad loans boosted the sector.

"Investors were purchasing a lot of these stocks on the basis of some potential event expected to boost profitability or their stock price," said Poddar.

Adding to the momentum, offshore foreign funds bought $91.1 million worth of Indian equities.

Two schemes investing in the petrochemicals sector that includes privatisation candidates Hindustan Petroleum Corp Ltd and Bharat Petroleum Corp Ltd jumped 6.14 percent on average outperforming the benchmark 30-share index.

The three drug funds with assets of Rs 1.2 billion ($24.8 million) rose on average by 5.13 per cent but were unable to surpass a 6.78 per cent gain on the sector index.

Sixty-nine diversified funds with assets of Rs 59 billion jumped 4.86 per cent on average, outpacing a 4.22 per cent gain on the 500-stock S&P CNX 500.

Balanced funds, which have large investments in debt assets and a sprinkling of equities, gained 4.53 per cent on average compared with a 3.9 per cent rise on the Value Research index.

Schemes having funds to invest of over Rs 7.9 billion and tracking specific indices matched on average the 4.18 per cent gain on the 50-issue National Stock Exchange index that is used as a benchmark for the category.

Twelve software funds with assets of Rs 12.7 billion rose on average by 4.01 per cent compared with a one per cent rise in the sector index. Funds investing in fast-moving consumer goods firms making items like soap saw their NAVs edged up 0.01 per cent compared with a 3.41 per cent sector index jump.