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Several stocks are riding high on the back of friendly proposals in the recent Budget; others have taken a beating and are sliding down
The Budget announced in late February has given a definite direction to the stock markets, at least for the short term. The markets have taken kindly to the Budget, and are in a strong uptrend. Indeed, market sentiments have improved drastically from the pre-Budget days. Several stocks have benefited from the Budget proposals and are riding the wave of optimism.
The biggest gainer post-budget is Ferro Alloys Corporation Ltd, which has surged 75%. It closed at Rs11.14 on 25 February 2010 and was at Rs19.51on 5 March 2010. With the 2% hike in Central excise duty, steel prices are set to rise further, which will boost the revenues of Ferro Alloys Corp.
Sulzer India was trading at Rs785.50 on the day before the Budget. It rose to Rs1243.65 on 5th March, registering a phenomenal rise of 58% in one week. The manufacturer of mass transfer devices has gained on account of its delisting plans. Its parent company, Sulzer, which currently holds 80% stake in its Indian arm, wants to acquire the remaining 20% at Rs870 per share.
The excise hike has also benefitted Lloyds Steel Industries Ltd and Surana Industries Ltd, which have gained 29% and 24% respectively.
Narmada Gelatines Ltd has witnessed a rise of 40% while ADF Foods has surged 28% over this period.
Software and IT services companies Tricom India Ltd and Zenith Infotech Ltd have witnessed a 27% gain each post-Budget. Shares of Tricom India, a non-voice business outsourcing company, surged on the anticipation of bagging multi-year contracts. Deutsche International Trust Corporation picked up 0.348 million equity shares of the company last week.
Mukand Engineers Ltd and Petron Engineering Construction Ltd have gained 27% and 26% respectively. Amrutanjan Health Care Ltd has jumped 25% from Rs560.35 to Rs699.95.
On the other hand, some stocks have lost out after the Budget announcement. Kernex Microsystems (India) Ltd and Kalindee Rail Nirman (Engineers) Ltd have taken a negative view of the lacklustre Railway Budget. While Kernex Microsystems has lost 17% post-Budget, Kalindee has fallen 10%.
Steel products manufacturer Zenith Birla (India) Ltd and telecom solutions provider ADC India Communications Ltd (formerly KRONE Communications) have slipped 14% and 12% respectively.
Shree Ashtavinayak Cine Vision Ltd and Delton Cables Ltd have fallen 11% each. Amongst the other losers are STI India Ltd (-9%), Gemini Communication Ltd (-9%), Indian Acrylics Ltd (-8%) and AI Champdany Industries Ltd (-8%).
Between 25 February and 5 March 2010, each BSE index (BSE 100, BSE 200, BSE 500 and BSE Sensex) has registered a gain of 5%. The Sensex has risen from 16,254 to 16,994. The average gain in the Moneylife sample of companies is 6%.
Despite a booming economy and vibrant equity markets, equity assets under management at many mutual fund houses remain abysmally low
At a time when the Indian economy is being lauded for its relentless growth and Indian companies are in the process of raising thousands of crores in the primary markets, the mutual fund industry is standing out like an eyesore. The sorry state of affairs in the mutual fund industry is evident from the miniscule corpus many of the fund houses are managing.
Here are the unpleasant facts. 18 out of 37 Asset Management Companies (AMCs) have less than Rs1,000 crore as assets under management (AUM) in their equity schemes. From these, 13 funds have less than Rs500 crore of AUMs. On an average, these 18 fund houses have Rs355.99 crore in equity MF schemes. Between them, they are managing a ridiculously low corpus of Rs6,407.80 crore.
Reliance Mutual Fund, the largest fund house, has AUM of Rs35,204 crore. HDFC Mutual Fund manages a corpus of Rs22,657 crore. These amounts might seem princely when compared to the small fund houses, but compared to international fund houses, even these are paltry.
Shinsei Mutual Fund is the smallest among the 18 funds, having a corpus of Rs19.47 crore as on 10 February 2010 while Escorts Mutual Fund and Benchmark Mutual Fund have Rs28.32 crore and Rs48.88 crore respectively in their kitty.
Quantum Mutual Fund and Baroda Pioneer Mutual Fund have AUM of Rs48.96 crore and Rs66.14 crore respectively.
Some of the bigger names in the industry like Bharti AXA Mutual Fund (Rs308.37 crore), AIG Mutual Fund (Rs612 crore) and Axis Mutual Fund (Rs874.11 crore) also appear in the list of funds having less than Rs1,000 crore.
Indian companies are capitalising on the recent bull-run by raising thousands of crores through IPOs and FPOs. In 2010, 17 companies have come out with public offers, (as on 8 March 2010). Despite the rush for raising funds and the flourishing equity markets, the investing public seems disinterested in vying for a share of the pie. The action in the equity markets has failed to catch on to the mutual fund industry.
Indeed, the lull being witnessed by most equity fund houses is a study in contrast to the growth of the economy. Despite equities being touted as the best asset class for the long term, investors continue to shy away from equities. Even the government’s efforts towards encouraging participation in equity mutual funds have failed to do the trick.