With the stock market hitting new all-time highs, it has become easier for MFs to attract investors, citing impressive returns from equity schemes, which are currently higher than that of bank fixed deposits
Buoyant stock markets helped attract over Rs39,000 crore in equity mutual fund schemes during the first seven months of FY2014-15. In the April-October period of 2013-14, such schemes had seen a net outflow of over Rs8,500 crore.
According to the latest data available with the Association of Mutual Funds in India (AMFI), investors have pumped in a net amount of Rs39,217 crore in equity-oriented MF schemes during April-October in current fiscal.
This trend is expected to continue in the coming months, industry experts said, adding there has been positive sentiment towards equity MFs and equity-linked savings schemes ever since the National Democratic Alliance (NDA) government came to power at the Centre in May.
"Equity schemes continued to attract capital in the past few months due to the continuing rally in equity markets," an analyst said.
These funds have added more than seven lakh investor accounts or folios in the first seven months of the current fiscal in view of sharp rise in the stock market.
The strong inflow in MF schemes coincided with the rise in BSE's benchmark index, Sensex, that spurted by around 25% during the period under review.
With the stock market hitting new all-time highs, it has become easier for MFs to attract investors, citing impressive returns from equity schemes which are currently higher than that of bank fixed deposits.
Mutual fund is an investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets.
The surge in inflows and improved valuations have taken the total assets under management (AUM) for the 45 fund houses to nearly Rs11 lakh crore.
According to the Committee headed by Vijay Kelkar, production sharing contract regime is more suited for Indian conditions rather than the revenue-sharing model as recommended by Rangarajan panel and adopted by UPA government
An expert panel headed by Vijay Kelkar has recommended the current production sharing regime for oil and gas exploration over the revenue-sharing model that is being considered for the next round of auction.
The 10-member Committee, headed by former petroleum and finance secretary Kelkar, said the production sharing contract (PSC) regime was more suited for Indian conditions rather than the revenue-sharing model based on the Rangarajan panel which was adopted by the previous United Progressive Alliance (UPA) government.
Under the present regime, oil companies can recover all costs — of successful and unsuccessful wells — from sales of oil and gas before sharing profit with the government.
The Comptroller and Auditor General of India (CAG) had criticised this approach on grounds that it encourages companies to increase capital expenditure and delay the government’s share.
Last year, a panel headed by the then Prime Minister’s Economic Advisory Council Chairman C Rangarajan had suggested moving to a revenue-sharing regime that requires companies to state upfront the quantum of oil or gas they will share with the government from the first day of production.
The Kelkar Committee, which was formed last year to suggest ‘Roadmap for Reduction in Import Dependency in Hydrocarbon Sector by 2030’, in its final report said PSC model was more suited to attract investments.
“The Committee has reservations against accepting the ’biddable’ revenue sharing contract (RSC) model due to the inherently misaligned risk-return structure which leads either (i) to lower levels of production due to resultant reduced exploration efforts and lower recovery ratio, or (ii) to high windfall gains to operators encouraging contract instability due to political economy factors,” it said.
It suggested two fiscal regimes — PSC linked to investment multiple with modified contract administration including self-certification of costs by the contractors, or PSC with biddable supernormal profits tax.
For boosting local production of oil and gas, the Kelkar committee has suggested improving contract stability and administration as also maintaining contract stability and sanctity and prevent retrospective contract changes.
It also favoured contract extension for perpetuity or up to the end of the economic life of the asset and empowering boards of state-owned oil companies for approving equity participation in fields they had got from the government on nomination basis.
“Increasing oil production from existing mature fields would require access to advanced global expertise and technologies. Hence, the government should empower board of national oil companies to offer equity participation by foreign and domestic private companies with access to such technologies,” it said.