SEBI looks into bank-sponsored MFs
Mumbai: The Securities and Exchange Board of India (Sebi) is, according to a report, said to be looking into complaints lodged by some private sector mutual funds against the "predatory marketing" by bank-sponsored mutual funds. These bank-sponsored funds, particularly private bank-sponsored funds, are funding investors to invest in their group mutual funds.

In the last two months, a number of banks have been extending loans to investors to enable them to invest in mutual fund schemes in a big way. Interestingly, a number of foreign banks that have floated mutual funds have joined the race in the last one month. What started off as a funding option to investors to invest in the initial public offer of new schemes has been transformed into a full-fledged retail loans business.
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Dividend stripping is the order of the day
Mumbai: Big investors have spotted a unique opportunity to increase their returns from the market. With a large number of mutual funds announcing hefty dividends, smart investors are back at the game of dividend stripping to reduce tax liabilities, says a report. Dividends are tax free in the hands of investors, but these unitholders rush to book capital losses immediately after the dividend is paid.

Since the net asset value of the fund falls after distribution of dividends, these unit holders encash their units at a lower price, and book capital losses which they can legitimately set off against capital gains elsewhere. The yields on their investments thus increases manifold, depending on the applicability of tax rates for the investor.
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GAIL, ONGC offload plans
Mumbai: The Indian government's proposed decision to offload 10-per cent stake in GAIL India and Oil and Natural Gas Corporation (ONGC) will not derail the initial public offering (IPO) plans of private companies. The government's stake sale is expected only to add to the quality of paper coming into the markets in 2004, and thus, will attract even the fence-sitting retail investors into the fray, merchant bankers told a newspaper.

Ajay Sondhi, vice-chairman and managing director, Kotak Mahindra Capital, said: "I think it is a very positive move as there is a big demand for good quality paper, which is reflected in the general bouyancy for these companies' scrips in the market." Markets sources added that liquidity is not an issue either with institutional or retail investors, and the only issue is the quality of paper in this market.
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