Return of entry load boosts morale of MF industry

The number of active IFAs more than halved to 20,000 from at least 50,000 in August 2009, when SEBI scrapped entry-load that rattled the then MF industry. Reliance Capital AMC CEO Sundeep Sikka said, “We are sure that new investors will start coming back if distributors are incentivised to reach out to new customers, especially in smaller towns”

Mumbai: The Securities and Exchange Board of India’s (SEBI) recent decision to allow one-time transaction fee on mutual fund schemes augurs well for the Rs7.43 lakh-crore asset management industry which is grappling with the sagging fund inflows after entry-load was scrapped in 2009, reports PTI.

“Advisory fee along with a transaction fee of Rs100-Rs150 is very positive move. This would at least ensure that the distributor is not incurring losses. The very fact that SEBI has taken care of the transaction fee itself is good enough for the moment. I am very excited as the step is in the right direction. This move will especially benefit the agents,” Reliance Capital Asset Management CEO Sundeep Sikka told PTI.

Edelweiss Asset Management CEO Vikaas Sachdeva, however, was guarded in his reply over the move.

“I foresee this as a precursor of much better things to come. The initiative will find its feet only over a period of time,” he said, adding that an initiative like this reflects SEBI’s openness to work with the industry to sort out issues dragging growth, one step at a time.

Mr Sikka is more optimistic. “We are sure that new investors will start coming back if distributors are incentivised to reach out to new customers, especially in smaller towns. This is a win-win situation for everyone. The online channel will pick up and sales of systematic investment plans (SIPs) will definitely go up further,” he said.

The number of active independent financial advisors (IFAs) more than halved to 20,000 from at least 50,000 in August 2009, when the markets watchdog scrapped entry-load that rattled the then vibrant industry.

Since August 2009, when SEBI banned entry load, the domestic mutual fund (MF) industry has been bleeding. According to the industry association Association of Mutual Funds in India (AMFI), June saw an outflow ofRs 66,442 crore from the industry, a steep jump from Rs48,850 crore that flowed out of the industry the previous month.

“I am a great advocate and believe that the potential of this industry for transforming the economy of remote corner of the country,” SEBI chairman UK Sinha had said.

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Gold climbs to new high of Rs 24,770 on firm global cues

Sentiments remained bullish as gold climbed in global markets following turmoil in financial markets on concern that the US economic recovery faltering, boosting the demand for the metal as a protection of wealth

New Delhi: Gold prices zoomed to yet another record of Rs24,770 per 10 grams by adding Rs420 in the national capital today on frantic buying by stockists and investors, driven by a firming trend overseas, reports PTI.

On the other hand silver held steady at Rs 58,600 per kg on reduced offtake at prevailing high levels.

Sentiments remained bullish as gold climbed $14.60 $USD 1,663.40 an ounce in global markets following turmoil in financial markets on concern that the US economic recovery faltering and the European sovereign-debt concern, boosting the demand for the metal as a protection of wealth.

Besides, emergence of buying by retailers for the ongoing festival season amid shifting of investor's fund from melting equities to surging bullion further influenced the market.

On the domestic front, gold of 99.9% and 99.5% purity jumped by Rs420 each to an all-time high of Rs24,770 and Rs24,650 per 10 grams, respectively.

Sovereigns followed suit and shot up by Rs300 to a new peak of Rs19,600 per piece of eight grams.

Meanwhile, silver ready held steady at Rs58,600 per kg, while weekly-based delivery fell by Rs420 to Rs58,375 per kg on profit-booking by speculators.

Silver coins remained in demand due to the festive season and gained Rs500 to Rs64,000 for buying and Rs64,500 for selling of 10 pieces.

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Global panic on US slowdown: Weekly Market Report

The panic that has been set off will build up the pressure on the market and could result in the Nifty going down to 4,800 levels eventually

This week, US politicians reached a deal to raise the debt ceiling and save the country from defaulting on its fiscal obligations, shifting the focus to expenditure cuts that could see a slowdown in the world's biggest economy. The likely impact on other economies together with European debt concerns that now threaten to engulf Italy and Spain rocked stock markets globally, cutting off more than 5% in the Indian markets this week. This is the biggest weekly decline in the domestic market since October 2010.

The week began with small gains on Monday following news of the US debt deal. Mixed domestic indicators led the market lower the next day and weaker-than-expected results by DLF and Bharti Airtel put the indices under pressure again on Wednesday. While the market opened firm on Thursday, higher food inflation data pulled it down by the close.

The rout in the US and European markets on Thursday dragged the Asian markets sharply lower on Friday and India was among the major losers, losing more than 2%. On a weekly basis, the Sensex tumbled 891 points to settle at 17,306 and the Nifty declined 271 points to 5,211.

The market is likely to remain down for a few days before there is a short rally. For the uptrend to continue, it is essential that the Nifty closes above the 5,400 level.

Late on Friday, Standard & Poor's downgraded the US government's sovereign credit rating by a notch from 'AAA' to 'AA+'-an unprecedented move that will hurt investment sentiment even harder. However, S&P affirmed the 'A-1+' short-term rating.

All sectoral gauges ended lower, and the BSE Realty and BSE Metal indices both tanked by 7%, while BSE Oil & Gas and BSE PSU each lost 2%.

The only gainer on the Sensex this week was ONGC (up 3%). The top losers were Sterlite Industries (down 11%), Reliance Communications, DLF, Mahindra & Mahindra and Jaiprakash Industries (all down 9%).

BPCL (up 7%), ONGC (up 3%) and Cipla (up 1%) were this week's gainers on the Nifty. Reliance Capital (down 14%), Sterlite Industries (down 11%), Sesa Goa, RCom (down 10% each) and M&M (down 9%) were the major losses.

Food inflation climbed up again to 8.04% for the week ended 23rd July, from a 20-month low of 7.33% in the previous week. The rise was mainly due to higher prices of onions, fruits and milk.

Also this week, the Prime Minister's Economic Advisory Council lowered its growth forecast for the current fiscal to 8.2%, below the government's target of 8.5%. It projected headline inflation to remain a high 9% till October, saying it expects price pressure to start easing from November, to around 6.5% by March 2012. The Council stated that while pressure from food inflation had fallen recently, the rate of price rice still remained quite high with the possibility of a further surge in the coming months.

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COMMENTS

Shashi ranjan

5 years ago

It is a good article ...

Sudindravr

5 years ago

This seems that we are going to face one more rescission in the global economy. Indian downtrend is for short term. Investor no need to be panic, as our economy is still in good sign and many companies stated no more job cuts/layoffs. We have to work towards investors awareness and government needs to curtail inflationary pressure. Those who wants to invest in real estate, be aware of what is happening in the industry.
Regards,

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