Mutual Funds
Equity mutual fund net inflows cross Rs7,000 crore in June, the highest in six years

Equity mutual funds reported a net inflow of Rs7,153 crore during June 2014, the highest since February 2008

Over the past two consecutive months, equity mutual fund schemes have been reporting record inflows. The inflows in June 2014 of over Rs7,000 crore, is higher than the sum of net inflows from December 2007 to May 2014, which is equivalent to Rs2,876 crore. This is so because, over the past five years from August 2009 to May 2014, as much as Rs40,357 crore flowed out of equity mutual funds. Why are investors showing a regained interest in equity mutual funds?

Retail investors are usually the last to join in on a rally. We have seen this in the past as well as where investors usually come in at the market peak. In January 2008, a record Rs13,678 crore flowed in to equity mutual funds. For the quarter ended June 2014, net inflows from equity mutual funds totalled Rs9,015 crore.

Equity linked savings schemes (ELSSs), which form a part of the total equity fund flows, witnessed an outflow of Rs156 crore. With the tax exemption limit under Section 80C increased to Rs1.50 lakh, as announced in the Union Budget presented on 10th July, we may witness higher inflows in these schemes during the March quarter of FY15.

During June, equity mutual funds recorded a sales of Rs12,368 crore, the highest since January 2008, where sales touched a record of Rs21,247 crore. Previous month, equity sales were reported at Rs10,244 crore. The sales in the past two month is substantially higher, considering that equity mutual fund sales have averaged just around Rs3,000-R4,000 crore per month over the past six years.


Redemptions were lower than the average of the past six months at Rs5,215 crore. Over the past six months, redemptions from equity mutual funds have averaged around Rs5,500 crore.

The number of equity mutual fund folios increased marginally by 44,838, to 29.26 million folios in June. The present number of equity folios is still lower by 8% compared to 30.05 million folios as on 30 June 2013. Equity fund witnessed a continuous decline in folios over the past year.

There were as many as eight new fund offers launched over the past month, bringing in as much as Rs1,114 crore. There were an equal number of open-ended schemes and close-ended schemes launched. This brings up the tally to 31 fund launched since the beginning of the calendar year and this is the most number of schemes launched in the first six month of the year.

Equity mutual fund assets under management soared by 10.95% to Rs2.41 lakh crore as on 30 June 2014 from Rs2.17 lakh crore as on 30 May 2014 on the back of record fund flows and the market rally. The CNX Nifty over this period gained 5.27%.


The reason why Pune’s Information Commissioner is sitting on an 'illegal' seat
While Information Commissioner Ravindra Jadhav entrenches himself as Pune division’s IC, it is important to understand why appointments in Maharashtra are different from any other state in India

Information Commissioner (IC) Ravindra Jadhav holds the Pune division post as of Monday. The board with his name etched on it and Right to Information (RTI) applicants,  who come for hearings of their second appeals, is a picture of normalcy. However, the undercurrent of autocracy that lies in the way this seat was gifted to Jadhav speaks of a danger to the sanctity of appointments of Information Commissioners, if one goes by the rules implemented for Maharashtra. 
So, what is wrong if Ratnakar Gaikwad transfers Ravindra Jadhav from one commission to another? Let us examine.
Unlike any other state in India, wherein the State Information Commission and entire strength of ICs is concentrated only at one particular city, that is the capital of the relevant State, Maharashtra’s formula is completely different.
When the RTI Act was implemented in 2005, Maharashtra Government decided upon setting up Information Commissions at different regions as a gesture of citizen convenience. Meaning, if you are a Nagpur resident and have filed a second appeal, you do not have to travel the distance to Mumbai, but you have the privilege of having an IC in Nagpur itself, which will conduct the hearing. 
Maharashtra has seven benches of Information Commissions located in Pune, Greater Mumbai, Konkan, Amravati, Nashik, Aurangabad and Nagpur, and the State Chief Information Commission, which is in Mumbai. Thus, appointments of ICs in Maharashtra are not general in nature. They are region-specific and bench specific. In case a transfer has to be made, the entire process of recommendation by the High Powered Committee (HPC) and a signature by the appointing authority, the Governor, is mandatory.
Therefore, despite Section 14 stating "The general superintendence, direction and management of the affairs of the State Information Commission shall vest in the State Chief Information Commissioner who shall be assisted by the State Information Commissioners and may exercise all such powers and do all such acts and things which may be exercised or done by the State Information Commission autonomously without being subjected to directions by any other authority under this Act’’, in Maharashtra the SCIC cannot trample or encroach on the Governor’s authority to appoint an information commissioner.
To reiterate, as per the norms, the Governor is the only authority to appoint Information Commissioners after a High Powered Committee (HPC) comprising the Chief Minister, the Leader of Opposition in the Legislative Assembly and Deputy Chief Minister recommends a name for the post. This clearly means, that the Chief State Information Commissioner (SCIC) of Maharashtra cannot be the authority to transfer an IC from one region to another, as per his whims and fancies. In fact, in a letter to the state government dated 28 November 2013, SCIC Gaiwad had brought to its notice, that vacancies of Information Commissioners in Amravati, Nagpur, Brihan Mumbai and Konkan need to be filled, which means he has been abiding by the rules that are exclusive to Maharashtra. So, why did he flout them in the case of Jadhav? And at whose behest?
In a trail mail started by RTI activist Sarbhajit Sen who feels the issue is being blown out of proportion, Lt Gen SCN Jatar (retd), a noted RTI activist has written, “Nowhere could I spot even by remote inference that someone down the line can change the place of posting once the appointing authority has specifically mentioned it in the appointment letter. Else, the letter would have read differently without giving the place of posting of the IC as is done in the Services. Promotion or first appointment and postings are never mixed up in good business rules.”
“In the industry as well as in government, the authority that can appoint and those that can issue postings are not always the same. By no stretch of imagination can the provision 'the general superintendence, direction and management of the affairs of the State Information Commission shall vest in the State Chief Information Commissioner'  mean that the CIC is empowered to move around ICs at his whim and fancy. In fact, postings of senior officers are always at a higher level than the immediate boss. Else, there would have been a separate clause to that effect or a word saying that 'the officer is being posted initially at so and so place and further postings would be at the discretion of the CIC in public interest',” he said.
RTI activist Vijay Kumbhar, who has vociferously raised this issue says, “The SCIC Ratnakar Gaikwad, while transferring three ICs last year had defied even the legal  opinion of Advocate General (AG) that 'A State Information Commissioner cannot be transferred unless he resigns from his present posting'.’ Jadhav has not resigned – he has been simply transferred.”
In a letter to the Governor last year, Kumbhar had stated, “This was revealed after an official copy of AG's report in a similar case few years back was obtained. AG's report about the transfer clearly states that even if the high power committee (comprising Chief Minister, Deputy Chief Minister & Leader of Opposition in Vidhansabha) decides to recommend to the Governor transfer on new posting for an SIC, his resignation from his present posting is essential. Even when this report is in the records of the General Administration Department and State Information Commission, CIC Gaikwad ordered transfers of SIC, MH Shah from Nasik to Pune, Bhaskar Patil from Amravati to Nagpur and PW Patil from Nagpur to Nasik in June 2012 within a week after taking over as CIC.”
Since there is no power vested in state CIC for such transfers in RTI Act 2005, Vijay Kumbhar had written to the Governor to revoke these illegal transfers. 
“The legal opinion in this report has confirmed his contention that transfers of SIC's by SCIC Gaikwad were illegal. As per the report in 2007-08, the SIC Nagpur Vilas Patil had requested to the High Power Committee for his transfers to Nasik. The Committee under the chairmanship of Chief Minister accepted his request and sent recommendation of his transfer to the Governor. However the Governor's office observed that there was no provision of SIC's transfers in RTI Act, 2005 and ordered for the opinion of law and judiciary department and the AG.” 
In his report submitted to the Government on 14 February 2008 the AG states, 'Minutes of the high power committee clearly indicate a specific recommendation of commissioner for a specific reason. Committee can change the decision provided he (Vilas Patil) resigns from his present post. His appointment would be a fresh appointment requiring his resignation from his post at Nagpur. Neither an amendment nor a partial notification of the extant notification would serve the purpose.” 
Following this complication Patil withdrew his request for transfer. 
As per the minutes of the HPC, each of these three SIC's had been recommended for a specific region by the committee and the appointment letters signed by the Chief Secretary also indicate their postings. It is clear that even the HPC cannot transfer an SIC, then how can state CIC order and execute such transfers? The State CIC has clearly defied all authorities and procedures.
Let us for a minute say these legal technicalities are irrelevant. Then why not get them out of the way through an official process? Until such time, no one can be above law, and therefore, it will continue to be an issue.
(Vinita Deshmukh is consulting editor of Moneylife, an RTI activist and convener of the Pune Metro Jagruti Abhiyaan. She is the recipient of prestigious awards like the Statesman Award for Rural Reporting which she won twice in 1998 and 2005 and the Chameli Devi Jain award for outstanding media person for her investigation series on Dow Chemicals. She co-authored the book “To The Last Bullet - The Inspiring Story of A Braveheart - Ashok Kamte” with Vinita Kamte and is the author of “The Mighty Fall”.) 


Sensex, Nifty loses on disappointing budget – Thursday closing report
Nifty to move sideways

Yesterday we had said that the market would continue to remain under pressure. Today, following extreme intraday volatility, the indices finally ended in the negative. The market was trading flat until the start of the much awaited budget session. After the finance minister started his budget speech, the indices slumped and traded in the negative almost till the end of the speech. Post the budget, the benchmark zoomed up. From the low of the day till the high, Nifty was up by 252 points and Sensex was up by almost 800 points. However, in the last half hour, few minutes the index crashed and the entire gains were wiped off. 
Sensex opened at 25,514 while the Nifty opened at 7,590. Sensex moved to the level of 25,920 after hitting a low of 25,117 and closed at 25,373 (down 72 points or 0.28%). The Nifty hit a low of 7,479 after which it reached upto the level of 7,731 and closed at 7,568 (down 17 points or 0.23%). The NSE recorded a volume of 158.11 crore shares. India VIX fell 12.22% to close at 15.9650.
One of the mentions in the budget speech was to provide tax incentives for Real Estate Investment Trusts and hiking the deduction limit on interest on housing loan in respect of self occupied house property from Rs 1.5 lakh to Rs 2 lakh. DLF (9.22%), one such player in the sector, was the top gainer in the ‘A’ group on the BSE. Bharat Electronics (6.10%) was again the top loser today in the ‘A’ group on the BSE. US company Alcoa Inc reported better-than-expected earnings and has also increased its 2014 growth estimate for the North America commercial transportation market. Hindalco unit Novelis Inc directly competes with Alcoa in the North American markets. Hindalco (3.16%) was the top gainer in the Sensex 30 pack. Hero MotoCorp (3.99%) was the top loser in the Sensex 30 stock.
US indices closed in the green on Wednesday. Except for Shanghai Composite (0.01%), Nikkei 225 (0.56%) and Straits Times (0.18%) all the other Asian indices closed in the positive. Jakarta Composite (1.46%) was the top gainer. European indices were trading sharply lower on account of troubles in Portuguese banking system. The US Futures were trading deeply in red, following the release of meetings Fed’s minutes that. Federal Reserve officials said that monetary policy needed to continue to promote the favorable financial conditions required to support the economic expansion, according to the minutes of the June 17-18 Federal Open Market Committee meeting released on Wednesday.


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