The Rs7.2 trillion Indian mutual fund industry is revisiting its business model to be in sync with the new norms put in place by the capital market regulator, the Securities and Exchange Board of India, or Sebi.
India has 36 asset management companies (AMCs) and at least some of them are planning to start their own distribution business instead of selling funds through third-party distributors. Among other things, they plan to cut distributors' commission by 25-30 basis points (bps) and shift their focus from frequent churning of funds to managing money for the longer term.
One basis point is one-hundredth of a percentage point.
Sebi banned fund houses from charging investors an upfront fee of up to 2.25%, known as entry load, from 1 August.
That encouraged fund houses to fine-tune the exit load, or the penalty they charge investors on premature redemptions, from six months to three years. In other words, fund houses have forced the investor to lock in their investment for three years if they do not want to pay the exit load.
The exit load is currently capped at 1% of investment.
However, only retail investors are subjected to this and fund houses do not charge the exit load on any investment of Rs5 crore and above.
The plan was to use the exit load to take care of the commission paid to the distributors. The fund houses also announced a new incentive structure for distributors ranging between 0.5% and 1.25%.
JM financial Asset Management Pvt. Ltd is offering 1.25%, UTI Asset Management Ltd 1% and HDFC Asset Management Ltd 70 bps, one of the lowest in the industry.
However, this move has not gone down well with the market regulator. It has directed fund houses to bring parity in the exit load for all class of investors, irrespective of the amount of investment.
It also said fund houses should follow a uniform exit load structure for all plans within a scheme. Normally each mutual fund scheme has different plans catering to different classes of investors.
Finally, on Tuesday, Sebi asked the fund houses to limit the lock-in period to one year.
The three-year lock-in, planned by AMCs, would have covered a major portion of equity fund investments in the industry.
According to the industry lobby Association of Mutual Funds in India (Amfi), 57.23% of all the equity investments as of 31 March were less than two years old. The rest of the corpus was more than two years old, but Amfi does not specify the maturity profile.
According to Rajesh Krishnamoorthy, managing director of iFast Financial India Pvt. Ltd, a transaction intermediary, "a minuscule portion of assets would be more than three years old".
This means that had the lock-in period been kept at three years, almost the entire assets under management would have been subjected to the exit penalty. Only 20.33% of the equity assets managed by the industry were less than one-year-old on 31 March.
A majority of the sales in mutual funds come from thirdparty distributors. Some fund houses say the dependence on third-party distributors may decline gradually following the regulatory changes.
"The brokerage structure has to come down to adopt the new changes. The impact of the recent changes on distributors' commission could be 25-30 basis points across the industry," said Suresh Soni, chief investment officer at Deutsche Asset Management (India) Pvt. Ltd.
Waqar Naqvi, CEO, Taurus Asset Management Co. Ltd, said "Incentives for distributors will have to come down.
Each AMC will take a call based on its subscription-redemption ratio. It varies between 35% and 50%. This means roughly between 35% and 50% of the subscriptions into mutual funds get redeemed within the first one year." Subscription-redemption ratio is the proportion of investors withdrawing their investments. If the ratio is high, funds will pay a lower upfront commission.
Loyalty bonus Some fund houses say while reducing the incentives for distributors, a separate loyaltybased bonus programme could be started by the AMCs in order to encourage the distributors.
"The entire business model needs to be reworked to encourage the distributors, as their commissions are reduced by 25-30 bps. We may have to start loyalty-based bonus programmes for the distributors to encourage them to continue with fund distribution business and add more long-term investors to our customer base," said the chief marketing officer at an AMC, controlled by a large bank, who didn't want to be named.
As a part of the loyalty programme, a distributor will be paid a fixed commission every year as long as the investor stays invested in a scheme.
This could happen as early as next month.
"One way out could be (to) progressively increase the trail commission earned by the distributors--the longer the investor remains the higher trail the agent gets," said an executive whose fund house is currently offering a new fund.
The trail commission is paid to agents by fund houses at the end of the year based on the assets they helped bring in.
For instance, if the first year trail is 50 bps, it could be raised to 60 bps in the second year and 75 bps in the third.
"Although we cannot comment on specific changes that will be made in distributors' commission, we believe that even if margins fall, the volume is poised to increase as mutual fund loads have been relaxed for investors. We believe that margins will be compensated by volumes," said Sundeep Sikka, CEO, Reliance Capital Asset Management Ltd, which manages at least Rs1.08 trillion in assets.
"The trail commission is essential if the distributors need to be encouraged to sell. But if there is no penalty on exit, it makes more sense for the distributor to encourage the investor to sell the units and enter a new scheme," said Sanjay Sinha, CEO, DBS Chola Asset Management Ltd.
Others agree. "If something becomes cheaper the demand goes up," Soni of Deutsche Asset Management said. According to him, fund houses will revise their business model and work more on volumes rather than on margins.
"Some fund houses may shift their focus from thirdparty distribution channel and start their own distribution services and strengthen their physical and Internet banking channels," he added.
As of June, there were 91,671 agent distributors registered with Amfi. Most banks and 20-25 large national and regional distributors also sell MFs.
Monday, August 24, 2009
Saturday, August 22, 2009
Asset allocation for disciplined investing
There are no short cuts to investing and more often than not investors burn their fingers in trying to time the market. My advice therefore to all investors with long-term investment goals is to follow disciplined investing with a risk reward balance. It definitely pays.
We all know of the proverb "Don't put all your eggs in one basket", similarly investors should diversify investments across asset classes, markets, managers, tenor, etc. to achieve desired returns with lower risk at the portfolio level.
Diversification involves dividing an investment portfolio among different asset categories, such as equities, fixed income and alternate investments. The process of determining which mix of assets to hold in a portfolio varies from investor to investor and also on the investment objectives.
If the portfolio has the right allocation, it will be well on its way to deliver the investment goals (with an acceptable amount of risk factored in).
Therefore, before making any investments, investors should define an investment philosophy and assess their investment objective, risk profile and suitability.
Your investment objectives need to be set, based on factors such as personal wealth level, age, family circumstances, investment/financial goals, need for regular income streams, understanding of asset classes and risk reward payoffs, conventional versus alternate assets such as art, commodities, real estate.
Some other factors include loss bearing ability, past investment experience time horizon of the investment, liquidity needs, proportion of liquid net worth in a high risk/locked-in product, tax status, inflation and market outlook.
The asset allocation that works best for an investor will depend largely on the time horizon and his/her ability to tolerate risk. Investors should pay attention to structural considerations such as financial planning, trusts, insurance and annuities, and tax and liability management.
Once an investor has decided on the investment objective and risk profile, asset allocation would include all or most of the following considerations/steps:
• Document all the assumptions made
• Calculate rates of return, standard deviation and correlation between different asset classes
• Check for consistency of returns across economic cycles & time periods
• Select the asset mix that would optimize the risk reward payoff – minimum risk for the desired return
• Agree on the benchmarks to be used for comparing performance results and degree of tracking vs. benchmarks
• Decide if the investments are to be made on a staggered manner (in 3 to 4 installments), recommended in volatile markets
• Implement the desired asset allocation through best in class products based on net of tax expected returns
• Evaluate portfolio hedging options and cost
• Active versus Passive management
• Periodic review and rebalancing
Asset allocation has evolved over time. In its initial stages of evolution, this was a simple philosophy of spreading eggs across baskets to spread losses. It then moved to a more complicated mathematical model where the amount of allocation to be made to each asset class was made based on the risk-return framework and correlation between asset classes.
In its more modern form, asset allocation is a more forward looking exercise which lays significant importance to qualitative overlay. This qualitative overlay is derived from experts and it makes asset allocation a more relevant exercise in today’s time, than a traditional quant-based asset allocation.
This overlay can be in terms of analysis of geo-political events, macro economic indictors, market sentiment, or any other factor that cannot be captured by standard risk metrics such as standard deviation of an asset class.
With this evolution in the area of asset allocation, comes into play the role of Tactical Asset Allocation. Tactical Asset Allocation, to some, is essentially about market timing. To my mind, however, it is not market timing but is a dynamic strategy that actively adjusts a portfolio’s asset allocation by taking an informed call on the portfolio in reaction to or in anticipation of the certain trends.
While the importance of long term investments and therefore strategic asset allocation cannot be undermined, in today’s markets, tactical asset allocation, if followed with rigor can certainly deliver alpha (incremental returns) to an investor’s portfolio.
Once invested, one should periodically review and rebalance investments if required. Investors should have pre-defined Profit & Loss booking levels based on their profiles. These levels should be periodically reviewed and reset based on market outlook.
Investors should also maintain certain liquidity in the portfolio to take advantage of sudden opportunities. In addition, investors could consider maintaining separate trading and investment portfolios with different investment objectives.
With increasing globalization, complexity, volatility and lack of time and/or expertise, smart investors always engage professional investment advisors to manage their portfolios. Good Investment Advisors have developed the skill, insight, perspective, and common sense needed to recognize when assets and/or markets may be entering cyclical and secular turning point.
Finally the most crucial factor of disciplined investing - never get emotionally attached to your investments. There is no harm in booking profits and staying liquid. Markets will always give opportunities to make returns from investments in the future.
David M. Darst, Chief Investment Strategist at Morgan Stanley Smith Barney says, "Rather than attempting to time the market in a limited number of asset classes, asset allocation seeks, through diversification, to provide higher returns with lower risk over a sufficiently long time frame and to appropriately compensate the investor for bearing non-diversifiable volatility."
We all know of the proverb "Don't put all your eggs in one basket", similarly investors should diversify investments across asset classes, markets, managers, tenor, etc. to achieve desired returns with lower risk at the portfolio level.
Diversification involves dividing an investment portfolio among different asset categories, such as equities, fixed income and alternate investments. The process of determining which mix of assets to hold in a portfolio varies from investor to investor and also on the investment objectives.
If the portfolio has the right allocation, it will be well on its way to deliver the investment goals (with an acceptable amount of risk factored in).
Therefore, before making any investments, investors should define an investment philosophy and assess their investment objective, risk profile and suitability.
Your investment objectives need to be set, based on factors such as personal wealth level, age, family circumstances, investment/financial goals, need for regular income streams, understanding of asset classes and risk reward payoffs, conventional versus alternate assets such as art, commodities, real estate.
Some other factors include loss bearing ability, past investment experience time horizon of the investment, liquidity needs, proportion of liquid net worth in a high risk/locked-in product, tax status, inflation and market outlook.
The asset allocation that works best for an investor will depend largely on the time horizon and his/her ability to tolerate risk. Investors should pay attention to structural considerations such as financial planning, trusts, insurance and annuities, and tax and liability management.
Once an investor has decided on the investment objective and risk profile, asset allocation would include all or most of the following considerations/steps:
• Document all the assumptions made
• Calculate rates of return, standard deviation and correlation between different asset classes
• Check for consistency of returns across economic cycles & time periods
• Select the asset mix that would optimize the risk reward payoff – minimum risk for the desired return
• Agree on the benchmarks to be used for comparing performance results and degree of tracking vs. benchmarks
• Decide if the investments are to be made on a staggered manner (in 3 to 4 installments), recommended in volatile markets
• Implement the desired asset allocation through best in class products based on net of tax expected returns
• Evaluate portfolio hedging options and cost
• Active versus Passive management
• Periodic review and rebalancing
Asset allocation has evolved over time. In its initial stages of evolution, this was a simple philosophy of spreading eggs across baskets to spread losses. It then moved to a more complicated mathematical model where the amount of allocation to be made to each asset class was made based on the risk-return framework and correlation between asset classes.
In its more modern form, asset allocation is a more forward looking exercise which lays significant importance to qualitative overlay. This qualitative overlay is derived from experts and it makes asset allocation a more relevant exercise in today’s time, than a traditional quant-based asset allocation.
This overlay can be in terms of analysis of geo-political events, macro economic indictors, market sentiment, or any other factor that cannot be captured by standard risk metrics such as standard deviation of an asset class.
With this evolution in the area of asset allocation, comes into play the role of Tactical Asset Allocation. Tactical Asset Allocation, to some, is essentially about market timing. To my mind, however, it is not market timing but is a dynamic strategy that actively adjusts a portfolio’s asset allocation by taking an informed call on the portfolio in reaction to or in anticipation of the certain trends.
While the importance of long term investments and therefore strategic asset allocation cannot be undermined, in today’s markets, tactical asset allocation, if followed with rigor can certainly deliver alpha (incremental returns) to an investor’s portfolio.
Once invested, one should periodically review and rebalance investments if required. Investors should have pre-defined Profit & Loss booking levels based on their profiles. These levels should be periodically reviewed and reset based on market outlook.
Investors should also maintain certain liquidity in the portfolio to take advantage of sudden opportunities. In addition, investors could consider maintaining separate trading and investment portfolios with different investment objectives.
With increasing globalization, complexity, volatility and lack of time and/or expertise, smart investors always engage professional investment advisors to manage their portfolios. Good Investment Advisors have developed the skill, insight, perspective, and common sense needed to recognize when assets and/or markets may be entering cyclical and secular turning point.
Finally the most crucial factor of disciplined investing - never get emotionally attached to your investments. There is no harm in booking profits and staying liquid. Markets will always give opportunities to make returns from investments in the future.
David M. Darst, Chief Investment Strategist at Morgan Stanley Smith Barney says, "Rather than attempting to time the market in a limited number of asset classes, asset allocation seeks, through diversification, to provide higher returns with lower risk over a sufficiently long time frame and to appropriately compensate the investor for bearing non-diversifiable volatility."
NRI Keen To Invest In Indian MF
Many non-resident Indians are keen to keep their Indian ties intact and invest in various avenues like mutual funds (MFs), fixed deposits, real estate and so on.One Of Well Known Financial advisories says, "Most of these people look to return to India finally. That is one of the reasons why they are keen to invest here."
Apart of emotional reasons, it also makes sense as the economy of India is growing at better rate than other countries in the current situation. A wealth manager with a bank says, "The chances of getting double digit returns abroad are limited. In India, you can always hope to get 8-10 percent returns. For example, Indian stock market has given even 100 percent returns till a few years ago, something one can never dream of in a developed country."
However, financial advisors caution NRIs that they have to be careful while listing the details at the time of investment. They should clearly mention their status, complete with relevant documents and details. Advisor offers an example of investing in MFs, "They should clearly mention in the application form that they are NRIs. They should also provide their overseas address. In case of fixed deposits, they should know the difference between various deposits like NRE account and NRO account. This is crucial because you can repatriate the income under NRO, while you can't do the same in NRE account."
The issue of relevant papers and documents is something that creeps up regularly in conversations with financial experts. They all insist that having relevant documents is a key factor. "Some investments may require the investor's status card abroad. If they are going for insurance cover, the company may ask for details like work permit in some cases. It can vary from company to company," says Financial Planner
Apart of emotional reasons, it also makes sense as the economy of India is growing at better rate than other countries in the current situation. A wealth manager with a bank says, "The chances of getting double digit returns abroad are limited. In India, you can always hope to get 8-10 percent returns. For example, Indian stock market has given even 100 percent returns till a few years ago, something one can never dream of in a developed country."
However, financial advisors caution NRIs that they have to be careful while listing the details at the time of investment. They should clearly mention their status, complete with relevant documents and details. Advisor offers an example of investing in MFs, "They should clearly mention in the application form that they are NRIs. They should also provide their overseas address. In case of fixed deposits, they should know the difference between various deposits like NRE account and NRO account. This is crucial because you can repatriate the income under NRO, while you can't do the same in NRE account."
The issue of relevant papers and documents is something that creeps up regularly in conversations with financial experts. They all insist that having relevant documents is a key factor. "Some investments may require the investor's status card abroad. If they are going for insurance cover, the company may ask for details like work permit in some cases. It can vary from company to company," says Financial Planner
ICICI Bank to come out with IPO in 4 units, insurance stake sale possible
Keen to revive its plans to unlock values in its four units, in line with the revival in the stock markets, ICICI Bank Ltd Friday said it could make initial public offerings in four subsidiaries or sell stake in its insurance ventures, as soon as the government raises sectoral foreign direct investment (FDI) limit.
The bank would take a call on the subject once the laws are amended to hike foreign direct investment in insurance sector to 49% from 26%, ICICI Bank chief executive and managing director Chanda Kochhar told reporters.
Earlier, in 2007, the bank was contemplating to list its three units—ICICI Securities, ICICI Prudential Life Insurance and ICICI Lombard General Insurance.
The bank had also announced its intention to transfer its entire holdings in ICICI Prudential Life Insurance, ICICI Lombard General Insurance Co, Prudential ICICI Asset Management Co and Prudential ICICI Trust to ICICI Holdings. At that moment, Reserve Bank of India had said it preferred to avoid an intermediate holding company structure, under which a bank is owned by a holding company that conducts non-banking businesses, because it would raise problems with regulation.
While pointing out that ICICI Bank's share price had increased three times in the last six months to about Rs750 per share, Kochar clarified that the listing of its unit would help in creating values for the stake holders. At this price, ICICI's market capitalisation is about Rs800 billion compared to market leader SBI's about Rs1.2 trillion.
"Still we are way off from the peak of over Rs1,450," she rued but said that she would strive to do everything to add value in the group for the shareholders.
"In all these four units, ICICI Prudential Life Ltd, ICICI Lombard Ltd, ICICI Securities Ltd and ICICI Home Finance Ltd possibility exists, but nothing that we have finalised currently. Hence, nothing you would see immediately," she said, when asked about the time frame she envisaged in terms of monetising investment in these entities.
She, however, was non-committal on any preferential treatment for its existing shareholders in the IPOs, saying they would anyway share the value unlocked from this exercise.
"As far as subsidiaries are concerned, over a period, we (will) clearly monetise some investment made in our subsidiaries. This means we would either do IPO or watch what happens on the insurance side that is clearance of government's norms to raise FDI cap for selling stake in the venture," Kochhar said.
A bill to increase FDI cap to 49% from 26 is awaiting the nod from the parliament. Currently, ICICI Bank holds 74% stake in both life and non-life venture insurance companies.
"In terms of IPO, we should wait for how the FDI cap issue turns out and then decide what percentage foreign partners will hold and so on. We will take a decision after that," she elaborated, but made it clear that time and market was not opportune for IPO in the life or general insurance ventures.
Pointing out that there was no need to take a decision on IPO in a hurry, she said the bank had enough capital and also the requirement of investible funds in these subsidiaries was very small this year.
"As I said we have enough capital to fund our growth but to fund growth of subsidiaries as well. And I think in the current market, it's not the best value and the right optimum value that they are going to get. I would rather wait for the market to reach a position where we get most optimum value and then look at," she added. – Yogesh Sapkale
source:-ww.suchetadalal.com
The bank would take a call on the subject once the laws are amended to hike foreign direct investment in insurance sector to 49% from 26%, ICICI Bank chief executive and managing director Chanda Kochhar told reporters.
Earlier, in 2007, the bank was contemplating to list its three units—ICICI Securities, ICICI Prudential Life Insurance and ICICI Lombard General Insurance.
The bank had also announced its intention to transfer its entire holdings in ICICI Prudential Life Insurance, ICICI Lombard General Insurance Co, Prudential ICICI Asset Management Co and Prudential ICICI Trust to ICICI Holdings. At that moment, Reserve Bank of India had said it preferred to avoid an intermediate holding company structure, under which a bank is owned by a holding company that conducts non-banking businesses, because it would raise problems with regulation.
While pointing out that ICICI Bank's share price had increased three times in the last six months to about Rs750 per share, Kochar clarified that the listing of its unit would help in creating values for the stake holders. At this price, ICICI's market capitalisation is about Rs800 billion compared to market leader SBI's about Rs1.2 trillion.
"Still we are way off from the peak of over Rs1,450," she rued but said that she would strive to do everything to add value in the group for the shareholders.
"In all these four units, ICICI Prudential Life Ltd, ICICI Lombard Ltd, ICICI Securities Ltd and ICICI Home Finance Ltd possibility exists, but nothing that we have finalised currently. Hence, nothing you would see immediately," she said, when asked about the time frame she envisaged in terms of monetising investment in these entities.
She, however, was non-committal on any preferential treatment for its existing shareholders in the IPOs, saying they would anyway share the value unlocked from this exercise.
"As far as subsidiaries are concerned, over a period, we (will) clearly monetise some investment made in our subsidiaries. This means we would either do IPO or watch what happens on the insurance side that is clearance of government's norms to raise FDI cap for selling stake in the venture," Kochhar said.
A bill to increase FDI cap to 49% from 26 is awaiting the nod from the parliament. Currently, ICICI Bank holds 74% stake in both life and non-life venture insurance companies.
"In terms of IPO, we should wait for how the FDI cap issue turns out and then decide what percentage foreign partners will hold and so on. We will take a decision after that," she elaborated, but made it clear that time and market was not opportune for IPO in the life or general insurance ventures.
Pointing out that there was no need to take a decision on IPO in a hurry, she said the bank had enough capital and also the requirement of investible funds in these subsidiaries was very small this year.
"As I said we have enough capital to fund our growth but to fund growth of subsidiaries as well. And I think in the current market, it's not the best value and the right optimum value that they are going to get. I would rather wait for the market to reach a position where we get most optimum value and then look at," she added. – Yogesh Sapkale
source:-ww.suchetadalal.com
Reliance, HDFC MFs top Crisil ranking
Crisil's composite performance rankings (Crisl-CPR) saw Reliance Mutual Fund emerging as the most successful fund house for the first quarter, with their funds getting the maximum number of ranks (ten) in the top category of CPR 1.
HDFC Mutual Fund and ICICI (ICICIBANK.NS : 745.4 +25.85) Prudential Mutual Fund came up next with six CPR 1 ranks each, closely followed by Birla Sun Life Mutual Fund, DSP BlackRock Mutual Fund and UTI Mutual Fund with five CPR 1 ranks each.
For the quarter, Reliance MF showed a sharp improvement compared to the previous quarter ended March 2009, where the fund house received only four CPR 1 ranks.
According to Krishnan Sitaraman, director, Crisil FundServices, "Reliance Mutual Fund's strong performance was driven by its superior performance on risk adjusted returns as well as on portfolio related parameters in the equity, liquid and ultra short term debt categories."
For ICICI Prudential Mutual Fund, ICICI Prudential Income Plan and ICICI Prudential Short Term Plan came out strong on risk adjusted returns while ICICI Prudential Flexible Income Plan Premium performed well on portfolio based parameters like liquidity and company concentration.
For HDFC Mutual Fund, its HDFC Top 200 Fund came on top based on risk adjusted returns, while the HDFC Cash Management Fund Savings Plan revealed consistent CPR performance and returns. HDFC Cash Management Fund Treasury Advantage Plan was another CPR 1 ranker which did well on risk based parameters like volatility, company concentration and asset size
HDFC Mutual Fund and ICICI (ICICIBANK.NS : 745.4 +25.85) Prudential Mutual Fund came up next with six CPR 1 ranks each, closely followed by Birla Sun Life Mutual Fund, DSP BlackRock Mutual Fund and UTI Mutual Fund with five CPR 1 ranks each.
For the quarter, Reliance MF showed a sharp improvement compared to the previous quarter ended March 2009, where the fund house received only four CPR 1 ranks.
According to Krishnan Sitaraman, director, Crisil FundServices, "Reliance Mutual Fund's strong performance was driven by its superior performance on risk adjusted returns as well as on portfolio related parameters in the equity, liquid and ultra short term debt categories."
For ICICI Prudential Mutual Fund, ICICI Prudential Income Plan and ICICI Prudential Short Term Plan came out strong on risk adjusted returns while ICICI Prudential Flexible Income Plan Premium performed well on portfolio based parameters like liquidity and company concentration.
For HDFC Mutual Fund, its HDFC Top 200 Fund came on top based on risk adjusted returns, while the HDFC Cash Management Fund Savings Plan revealed consistent CPR performance and returns. HDFC Cash Management Fund Treasury Advantage Plan was another CPR 1 ranker which did well on risk based parameters like volatility, company concentration and asset size
Tuesday, August 18, 2009
Draft tax code – how does it affect you?
Last Week, The Finance Minister announced the draft tax code. In his budget announcement on July 6 he had promised to follow up with the draft code. Well its here, and some of the changes, as you might have already seen in the press, are the most substantial that have been suggested in over a generation. So how do these affect you?
Well, the simple answer is that right now these changes don’t affect you. Why?
First of all, this is a draft code and contains proposals. Different interested parties have been invited to give their views, comments and feedback on the draft. You can too offer your feedback.
Secondly, if at all these proposals do pass muster, they will need to be drafted into a Parliamentary bill likely by end 2009 and be taken through legislative procedure. That itself could take time, and the Minister has suggested a start date of 2011 for when the code might actually be enforced, if it is a law by then.
So at the earliest, the impact of this tax code is likely two years away. So what should you be doing right now?
For starters just wait and watch. If you have strong views on some of the radical changes proposed, you should give your feedback here
Talk to your HR and payroll department to understand the impact of some of the proposed changes regarding how perquisites and benefits will be taxed. Ask them to explain to you how your take home pay might change and what they can do to mitigate the impact of any higher tax burden on you.
Sources:-www.reuters.in
Well, the simple answer is that right now these changes don’t affect you. Why?
First of all, this is a draft code and contains proposals. Different interested parties have been invited to give their views, comments and feedback on the draft. You can too offer your feedback.
Secondly, if at all these proposals do pass muster, they will need to be drafted into a Parliamentary bill likely by end 2009 and be taken through legislative procedure. That itself could take time, and the Minister has suggested a start date of 2011 for when the code might actually be enforced, if it is a law by then.
So at the earliest, the impact of this tax code is likely two years away. So what should you be doing right now?
For starters just wait and watch. If you have strong views on some of the radical changes proposed, you should give your feedback here
Talk to your HR and payroll department to understand the impact of some of the proposed changes regarding how perquisites and benefits will be taxed. Ask them to explain to you how your take home pay might change and what they can do to mitigate the impact of any higher tax burden on you.
Sources:-www.reuters.in
Monday, August 17, 2009
L&T Finance NCD Issue open on August 18
NCD issue opens on L&T Finance open on August 18.
L&T Finance Ltd., promoted by engineering and construction giant Larsen & Toubro Ltd. and L&T Capital Holdings Ltd., will open on August 18, its first-ever public offer of 50,00,000 Secured Redeemable Non-Convertible Debentures (NCDs) of Rs.1,000 each. The NCD issue aggregates to Rs5bn, with an option to retain over-subscription up to Rs5bn for issuance of additional NCDs, aggregating up to a total of Rs10bn. The NCD issue with various investment options and yield on Redemption of up to 10.5% (per annum) opens on August 18, and closes on September 4.
TheNCDs offered through the prospectus are proposed to be listed on National Stock Exchange of India (NSE). The face value of Rs1,000 per NCD and tradable lot size of 1 NCD is expected to enhance liquidity and trading in the secondary market.
The NCDs have been rated ‘CARE AA+’ by CARE and ‘LAA+’ by ICRA. Instruments with a rating of ‘CARE AA+’ by CARE are considered to offer high safety for timely servicing of debt obligations. Such instruments carry very low credit risk. The rating of ‘LAA+’ by ICRA indicates high-credit-quality and the rated instrument carries low credit risk.
There are four investment options:
Option 1 (Quarterly interest payment): The face value is Rs. 1,000 and the minimum application is Rs. 10,000 (Retail) and Rs. 1,01,000 (NIIs and QIBs) and in multiples of Rs. 1,000 therein. The redemption date or maturity period is 60 months. from the deemed date of allotment. The coupon rate is 9.51% p.a. and the annualized yield is 9.85%. The interest payment is quarterly and the face value plus any interest that may have accrued is payable on redemption.
Option 1I (Semi-annual interest payment): The face value is Rs. 1,000 and the minimum application is Rs. 10,000 (Retail) and Rs. 1,01,000 (NIIs and QIBs) and in multiples of Rs. 1,000 therein. The redemption date or maturity period is 60 months from the deemed date of allotment. The coupon rate is 9.62% p.a. and the annualized yield is 9.85%. The interest payment is semi-annual and the face value plus any interest that may have accrued is payable on redemption.
Option I1I (Cumulative interest payment): The face value is Rs. 1,000 and the minimum application is Rs. 10,000 (Retail) and Rs. 1,01,000 (NIIs and QIBs) and in multiples of Rs. 1,000 therein. The redemption date or maturity period is 88 months from the deemed date of allotment. The coupon rate is 9.95% compounded annually and the annualized yield is 9.95%. The interest payment is cumulative and Rs. 2,005 per NCD is payable on redemption.
Option IV (Semi-annual interest payment): The face value is Rs. 1,000 and the minimum application is Rs. 10,000 (Retail) and Rs. 1,01,000 (NIIs and QIBs) and in multiples of Rs. 1,000 therein. The redemption date or maturity period is 120 months from the deemed date of allotment. The coupon rate is 10.24% p.a. and the annualized yield is 10.50%. The interest payment is semi-annual and the face value plus any interest that may have accrued is payable on redemption.
Senior citizens, who are 65 or more years of age at any time during the financial year (FY) 2009-10, enjoy the special privilege to submit a self declaration in the prescribed Form 15H for non-deduction of tax at source in accordance with the provisions of section 197A (1C) of the I.T. Act even if the aggregate income credited or paid or likely to be credited or paid does not exceed the maximum amount not chargeable to tax; i.e., Rs. 225,000 for FY 2008-09 (proposed Rs. 240,000 from FY 2009-10).
L&T Finance was promoted by L&T and L&T Capital Holdings. The company was incorporated on November 22, 1994, as a public limited company under the Companies Act, 1956, to provide a range of financial services. L&T Finance began by financing the small and medium enterprises and later synergized with the opportunities provided by L&T ecosystem consisting of its subsidiaries and associates along with its large network of dealers, vendors, suppliers, clients, etc.
L&T Finance has now evolved into a multi-product asset backed finance company with a diversified corporate and retail portfolio. As on March 31, 2009, the company had an asset base of Rs521,864 lakhs. It has consistently made profits with its revenues for the year ending March 31, 2009, standing at Rs83,028 lakhs.
The funds raised through this issue will be used by the company for its various financing activities including lending and investments and for its business operations, including capital expenditure and working capital requirements.
L&T Finance Ltd., promoted by engineering and construction giant Larsen & Toubro Ltd. and L&T Capital Holdings Ltd., will open on August 18, its first-ever public offer of 50,00,000 Secured Redeemable Non-Convertible Debentures (NCDs) of Rs.1,000 each. The NCD issue aggregates to Rs5bn, with an option to retain over-subscription up to Rs5bn for issuance of additional NCDs, aggregating up to a total of Rs10bn. The NCD issue with various investment options and yield on Redemption of up to 10.5% (per annum) opens on August 18, and closes on September 4.
TheNCDs offered through the prospectus are proposed to be listed on National Stock Exchange of India (NSE). The face value of Rs1,000 per NCD and tradable lot size of 1 NCD is expected to enhance liquidity and trading in the secondary market.
The NCDs have been rated ‘CARE AA+’ by CARE and ‘LAA+’ by ICRA. Instruments with a rating of ‘CARE AA+’ by CARE are considered to offer high safety for timely servicing of debt obligations. Such instruments carry very low credit risk. The rating of ‘LAA+’ by ICRA indicates high-credit-quality and the rated instrument carries low credit risk.
There are four investment options:
Option 1 (Quarterly interest payment): The face value is Rs. 1,000 and the minimum application is Rs. 10,000 (Retail) and Rs. 1,01,000 (NIIs and QIBs) and in multiples of Rs. 1,000 therein. The redemption date or maturity period is 60 months. from the deemed date of allotment. The coupon rate is 9.51% p.a. and the annualized yield is 9.85%. The interest payment is quarterly and the face value plus any interest that may have accrued is payable on redemption.
Option 1I (Semi-annual interest payment): The face value is Rs. 1,000 and the minimum application is Rs. 10,000 (Retail) and Rs. 1,01,000 (NIIs and QIBs) and in multiples of Rs. 1,000 therein. The redemption date or maturity period is 60 months from the deemed date of allotment. The coupon rate is 9.62% p.a. and the annualized yield is 9.85%. The interest payment is semi-annual and the face value plus any interest that may have accrued is payable on redemption.
Option I1I (Cumulative interest payment): The face value is Rs. 1,000 and the minimum application is Rs. 10,000 (Retail) and Rs. 1,01,000 (NIIs and QIBs) and in multiples of Rs. 1,000 therein. The redemption date or maturity period is 88 months from the deemed date of allotment. The coupon rate is 9.95% compounded annually and the annualized yield is 9.95%. The interest payment is cumulative and Rs. 2,005 per NCD is payable on redemption.
Option IV (Semi-annual interest payment): The face value is Rs. 1,000 and the minimum application is Rs. 10,000 (Retail) and Rs. 1,01,000 (NIIs and QIBs) and in multiples of Rs. 1,000 therein. The redemption date or maturity period is 120 months from the deemed date of allotment. The coupon rate is 10.24% p.a. and the annualized yield is 10.50%. The interest payment is semi-annual and the face value plus any interest that may have accrued is payable on redemption.
Senior citizens, who are 65 or more years of age at any time during the financial year (FY) 2009-10, enjoy the special privilege to submit a self declaration in the prescribed Form 15H for non-deduction of tax at source in accordance with the provisions of section 197A (1C) of the I.T. Act even if the aggregate income credited or paid or likely to be credited or paid does not exceed the maximum amount not chargeable to tax; i.e., Rs. 225,000 for FY 2008-09 (proposed Rs. 240,000 from FY 2009-10).
L&T Finance was promoted by L&T and L&T Capital Holdings. The company was incorporated on November 22, 1994, as a public limited company under the Companies Act, 1956, to provide a range of financial services. L&T Finance began by financing the small and medium enterprises and later synergized with the opportunities provided by L&T ecosystem consisting of its subsidiaries and associates along with its large network of dealers, vendors, suppliers, clients, etc.
L&T Finance has now evolved into a multi-product asset backed finance company with a diversified corporate and retail portfolio. As on March 31, 2009, the company had an asset base of Rs521,864 lakhs. It has consistently made profits with its revenues for the year ending March 31, 2009, standing at Rs83,028 lakhs.
The funds raised through this issue will be used by the company for its various financing activities including lending and investments and for its business operations, including capital expenditure and working capital requirements.
Hang Seng Benchmark Exchange Traded Scheme Files Offer Document With SEBI
Benchmark Mutual Fund has filed an offer document with Securities and Exchange Board of India (SEBI) to launch Hang Seng Benchmark Exchange Traded Scheme (Hang Seng BeES), an open-ended, exchange listed, index scheme tracking Hang Seng Index. The new fund offer (NFO) price for the scheme is Rs 10 per unit.
The investment objective of the scheme is to provide returns that, before expenses, closely correspond to the total returns of securities as represented by Hang Seng Index of Hang Seng Data Services Limited, by investing in the securities in the same proportion as in the Index.
The scheme offers only growth option.
The scheme will invest 90-100% in securities constituting Hang Seng Index and 0-10% in money market instruments, g-secs, bonds, debentures and cash at call. The exposure to the derivatives would be undertaken, when no equity shares of the constituents of the Index are available or equity shares are insufficient to take exposure in the constituents of the Index and would be restricted to 10% of the net assets of the scheme. The scheme shall also invest in derivatives traded on overseas exchanges only for hedging and portfolio balancing. The scheme shall invest in units of mutual fund scheme / overseas exchange traded funds based on Hang Seng Index upto 10% of the net assets of the Scheme. The margin paid for the derivative instruments will form part of the “Money Market Instruments, G-Secs, Bonds, Debentures, Debt instruments and cash at call” as mentioned in the asset allocation pattern.
The scheme will charge neither entry nor exit load.
Investors can invest under the scheme with a minimum investment amount of Rs. 10,000 (Rupees Ten Thousand only) and in multiples of Re.1 thereafter.
The scheme seeks to collect a minimum target amount of Rs. 1 crore during the NFO period.
The scheme's performance will be benchmarked against Hang Seng Index.
Vishal Jain will be the fund managers for Hang Seng Benchmark Exchange Traded Scheme
The investment objective of the scheme is to provide returns that, before expenses, closely correspond to the total returns of securities as represented by Hang Seng Index of Hang Seng Data Services Limited, by investing in the securities in the same proportion as in the Index.
The scheme offers only growth option.
The scheme will invest 90-100% in securities constituting Hang Seng Index and 0-10% in money market instruments, g-secs, bonds, debentures and cash at call. The exposure to the derivatives would be undertaken, when no equity shares of the constituents of the Index are available or equity shares are insufficient to take exposure in the constituents of the Index and would be restricted to 10% of the net assets of the scheme. The scheme shall also invest in derivatives traded on overseas exchanges only for hedging and portfolio balancing. The scheme shall invest in units of mutual fund scheme / overseas exchange traded funds based on Hang Seng Index upto 10% of the net assets of the Scheme. The margin paid for the derivative instruments will form part of the “Money Market Instruments, G-Secs, Bonds, Debentures, Debt instruments and cash at call” as mentioned in the asset allocation pattern.
The scheme will charge neither entry nor exit load.
Investors can invest under the scheme with a minimum investment amount of Rs. 10,000 (Rupees Ten Thousand only) and in multiples of Re.1 thereafter.
The scheme seeks to collect a minimum target amount of Rs. 1 crore during the NFO period.
The scheme's performance will be benchmarked against Hang Seng Index.
Vishal Jain will be the fund managers for Hang Seng Benchmark Exchange Traded Scheme
Friday, August 14, 2009
JP Morgan AMC Launches Investment Confidence Index
The J P Morgan Asset Managament-Valuenotes Investment Confidence Index, which will be published on a quarterly basis, captures the confidence of retail investors.
JPMorgan Asset Management India Pvt. Ltd. (JPMAMIPL) today announced the launch of the first Investment Confidence Index in India in association with ValueNotes. The J.P. Morgan Asset Management – ValueNotes Investment Confidence Index (ICI), which will be published on a quarterly basis, captures the confidence of retail investors, corporate investors and financial advisors on the Indian economic and investment environment. The findings of the inaugural survey show that the Indian financial community currently holds a cautiously optimistic view towards their local market.
ValueNotes, an independent market research company, was commissioned by J.P. Morgan Asset Management to conduct the survey. The ICI was developed by interviewing a random sample of retail investors (with a wallet size in excess of Rs 200,000), corporate investors and financial advisors. The survey took place in July 2009 in eight cities across India: Delhi/NCR, Mumbai, Kolkata, Chennai, Ahmedabad, Bengaluru, Hyderabad and Pune.
The key objective of the ICI is to quantify confidence in the investment environment among investors and advisors. The survey also attempts to study investment behaviour and sentiment based on key factors such as the improvement in the Indian and global economic environment, general investment atmosphere, expectation of growth in investment portfolios and others. Going forward, the ICI will map and analyse the short term and long term changes in investment behaviour and outlook every quarter, from an investor and distributor standpoint.
The J.P. Morgan Asset Management – Valuenotes Investment Confidence Index score is derived from responses to the following questions posed to all target segments:
1)The likelihood of the Indian economic situation improving from current levels in the next six months.
2)The likelihood of an improvement in the general investment market environment and atmosphere from current levels in the coming six months.
3)The possibility of the global economic environment improving from current levels in the coming six months.
4)The likelihood of the BSE Sensex increasing in the next six months.
5)The prospect of your / your clients’ investment portfolio appreciating in the coming six months.
6)Expected increase or decrease in the amount of investment and/or increase in mutual fund inflows in the coming six months.
Responses to these 6 questions also form the basis for arriving at the Retail Investor Confidence Index, Corporate Confidence Index and the Advisor Confidence Index which are sub-indices of the Investment Confidence Index. At any given point, the indices can move from ‘0’ to ‘200’, with ‘0’ depicting the most negative outlook; ‘200’ depicting full and absolute confidence and ‘100’ showing a neutral position.
Krishnamurthy Vijayan, Executive Chairman of J.P. Morgan Asset Management said, “We are extremely proud to present the J.P. Morgan Asset Management – ValueNotes Investment Confidence Index to the Indian investment community. Investment sentiment has always been a key focus in our business strategy across the globe. We have been monitoring retail investor sentiment closely within the major markets of Europe and Asia for some time by conducting investor confidence surveys since the early 1990s. The inaugural investor confidence index was launched in the UK, followed by Germany, France and other European countries. In Asia, a similar Investor Confidence Index has been launched by the firm in markets like Hong Kong, Japan and Taiwan and has been well received.”
Arun Jethmalani, Managing Director, ValueNotes commented, “The Indian economic prospects drive confidence across the board. A Government with a strong majority was viewed as the most positive economic signal. The Investment Confidence Index at the end of July 2009 stands at 135.9, arrived by taking an average of the Investor Confidence Index (highest at 138.3), Corporate Confidence Index (136.0) and the Advisor Confidence Index (133.5). A deeper study of the indices throws up a recurring theme across all three categories – consistently high levels of optimism on an improvement in the Indian economic situation. This is contrasted by a marked pessimism or significantly lower confidence on a global economic recovery.”
Key findings:
The recent election results have influenced investment confidence favourably, as investors and advisors alike have voted for a government mandated with a strong majority as the single most positive signal for the Indian economy today.
•48% of retail investors expect their income will increase and they will make additional investments over the next six months.
•Retail investors are more confident about making additional investments (136.4) than their advisors (132.1) expect them to.
•Advisors are significantly more optimistic about portfolio appreciation (146.8) than their retail clients (138.2).
•Among cities – Retail and IFA confidence in Chennai is the highest at 160.2 and 147.3 respectively. In contrast, retail confidence in Hyderabad is lowest at 98.1 and IFA confidence is the lowest in Kolkata at 125.7.
•Retail investor confidence declines as age increases, with the age group 22 to 25 most confident (142.7) and investors aged 55 to 60 the least confident (131.3).
•By occupational status, the salaried employees from the private sector have the maximum confidence at 140.8.
•Retail investor responses indicate that investments in stocks and mutual funds increase with an increase in wallet size. While 37% of retail investors with wallet size between Rs 2 and 5 lakhs invested in stocks and mutual funds over the past 12 months, the figure increased to 79% for investors with wallet size Rs 50 lakhs and above.
•Both investors and advisors expect Sensex to be at 16,000 – 17,000 levels by December 2009. 76% of retail and 88% of advisors expect Sensex to rise from current (survey) levels.
•70% of corporates expect improvement in profits and employment opportunities.
•Half the corporates surveyed believe that the Indian rupee is likely to appreciate in the next six months while 76% of respondents expect interest rates to move upwards.
•36% of corporate respondents expect RBI to intervene in the medium term to reduce liquidity in 6-12 months while 44% believe that the NPAs can be expected to increase.
JPMorgan Asset Management India Pvt. Ltd. (JPMAMIPL) today announced the launch of the first Investment Confidence Index in India in association with ValueNotes. The J.P. Morgan Asset Management – ValueNotes Investment Confidence Index (ICI), which will be published on a quarterly basis, captures the confidence of retail investors, corporate investors and financial advisors on the Indian economic and investment environment. The findings of the inaugural survey show that the Indian financial community currently holds a cautiously optimistic view towards their local market.
ValueNotes, an independent market research company, was commissioned by J.P. Morgan Asset Management to conduct the survey. The ICI was developed by interviewing a random sample of retail investors (with a wallet size in excess of Rs 200,000), corporate investors and financial advisors. The survey took place in July 2009 in eight cities across India: Delhi/NCR, Mumbai, Kolkata, Chennai, Ahmedabad, Bengaluru, Hyderabad and Pune.
The key objective of the ICI is to quantify confidence in the investment environment among investors and advisors. The survey also attempts to study investment behaviour and sentiment based on key factors such as the improvement in the Indian and global economic environment, general investment atmosphere, expectation of growth in investment portfolios and others. Going forward, the ICI will map and analyse the short term and long term changes in investment behaviour and outlook every quarter, from an investor and distributor standpoint.
The J.P. Morgan Asset Management – Valuenotes Investment Confidence Index score is derived from responses to the following questions posed to all target segments:
1)The likelihood of the Indian economic situation improving from current levels in the next six months.
2)The likelihood of an improvement in the general investment market environment and atmosphere from current levels in the coming six months.
3)The possibility of the global economic environment improving from current levels in the coming six months.
4)The likelihood of the BSE Sensex increasing in the next six months.
5)The prospect of your / your clients’ investment portfolio appreciating in the coming six months.
6)Expected increase or decrease in the amount of investment and/or increase in mutual fund inflows in the coming six months.
Responses to these 6 questions also form the basis for arriving at the Retail Investor Confidence Index, Corporate Confidence Index and the Advisor Confidence Index which are sub-indices of the Investment Confidence Index. At any given point, the indices can move from ‘0’ to ‘200’, with ‘0’ depicting the most negative outlook; ‘200’ depicting full and absolute confidence and ‘100’ showing a neutral position.
Krishnamurthy Vijayan, Executive Chairman of J.P. Morgan Asset Management said, “We are extremely proud to present the J.P. Morgan Asset Management – ValueNotes Investment Confidence Index to the Indian investment community. Investment sentiment has always been a key focus in our business strategy across the globe. We have been monitoring retail investor sentiment closely within the major markets of Europe and Asia for some time by conducting investor confidence surveys since the early 1990s. The inaugural investor confidence index was launched in the UK, followed by Germany, France and other European countries. In Asia, a similar Investor Confidence Index has been launched by the firm in markets like Hong Kong, Japan and Taiwan and has been well received.”
Arun Jethmalani, Managing Director, ValueNotes commented, “The Indian economic prospects drive confidence across the board. A Government with a strong majority was viewed as the most positive economic signal. The Investment Confidence Index at the end of July 2009 stands at 135.9, arrived by taking an average of the Investor Confidence Index (highest at 138.3), Corporate Confidence Index (136.0) and the Advisor Confidence Index (133.5). A deeper study of the indices throws up a recurring theme across all three categories – consistently high levels of optimism on an improvement in the Indian economic situation. This is contrasted by a marked pessimism or significantly lower confidence on a global economic recovery.”
Key findings:
The recent election results have influenced investment confidence favourably, as investors and advisors alike have voted for a government mandated with a strong majority as the single most positive signal for the Indian economy today.
•48% of retail investors expect their income will increase and they will make additional investments over the next six months.
•Retail investors are more confident about making additional investments (136.4) than their advisors (132.1) expect them to.
•Advisors are significantly more optimistic about portfolio appreciation (146.8) than their retail clients (138.2).
•Among cities – Retail and IFA confidence in Chennai is the highest at 160.2 and 147.3 respectively. In contrast, retail confidence in Hyderabad is lowest at 98.1 and IFA confidence is the lowest in Kolkata at 125.7.
•Retail investor confidence declines as age increases, with the age group 22 to 25 most confident (142.7) and investors aged 55 to 60 the least confident (131.3).
•By occupational status, the salaried employees from the private sector have the maximum confidence at 140.8.
•Retail investor responses indicate that investments in stocks and mutual funds increase with an increase in wallet size. While 37% of retail investors with wallet size between Rs 2 and 5 lakhs invested in stocks and mutual funds over the past 12 months, the figure increased to 79% for investors with wallet size Rs 50 lakhs and above.
•Both investors and advisors expect Sensex to be at 16,000 – 17,000 levels by December 2009. 76% of retail and 88% of advisors expect Sensex to rise from current (survey) levels.
•70% of corporates expect improvement in profits and employment opportunities.
•Half the corporates surveyed believe that the Indian rupee is likely to appreciate in the next six months while 76% of respondents expect interest rates to move upwards.
•36% of corporate respondents expect RBI to intervene in the medium term to reduce liquidity in 6-12 months while 44% believe that the NPAs can be expected to increase.
Bharti topples Reliance Ind as top fund bet
Leading mobile operator Bharti Airtel replaced Reliance Industries as the most preferred stock of domestic fund managers in July, becoming the only company to topple the dominance of the country's most valuable firm since at least December 2006.
"Bharti, as a consumption play, appears to be far more attractive to funds than a commodity play," said Sanjay Sinha, chief executive of DBS Cholamandalam Asset Management.
Bharti has a market value of about $33 billion, making it India's fourth-most valuable firm. Reliance is worth $66 billion, making it the country's largest firm by market cap.
As many as 273 funds collectively held 116 million shares of the cellular operator at July-end and 15 funds introduced the stock in their portfolios during the month, according to data from fund tracker ICRA Online.
By comparison, 270 funds held stakes in Reliance Industries, controlled by billionaire Mukesh Ambani, with at least seven dumping the firm -- which posted a larger-than-expected drop in June quarter net profit and is locked in a legal battle with Reliance Natural Resources, run by estranged younger brother Anil Ambani, over a gas-sales pact.
Bharti unseated Reliance Industries even though its shares have fallen 3.8 percent since it announced in May that it had renewed merger talks with South African peer MTN, nearly a year after the companies' prior talks fell through.
Bharti -- more than 30 percent owned by Southeast Asia's top phone firm Singapore Telecommunications -- has consistently added about 2.8 million subscribers a month, leading growth in an increasingly competitive space where rivals such as Vodafone have expanded networks rapidly.
Firms such as ICICI Prudential Asset Management, IDFC Mutual Fund, ING Investment Management and Principal Pnb Asset Management added Bharti stock to their portfolios, while Canara Robeco and DSP BlackRock dumped Reliance Industries from at least one of their fund's portfolios.
Bharti shares rose 2.4 percent in July, compared with an 8 percent rise in the broader market, while Reliance shares lost 3.3 percent.
"Bharti, as a consumption play, appears to be far more attractive to funds than a commodity play," said Sanjay Sinha, chief executive of DBS Cholamandalam Asset Management.
Bharti has a market value of about $33 billion, making it India's fourth-most valuable firm. Reliance is worth $66 billion, making it the country's largest firm by market cap.
As many as 273 funds collectively held 116 million shares of the cellular operator at July-end and 15 funds introduced the stock in their portfolios during the month, according to data from fund tracker ICRA Online.
By comparison, 270 funds held stakes in Reliance Industries, controlled by billionaire Mukesh Ambani, with at least seven dumping the firm -- which posted a larger-than-expected drop in June quarter net profit and is locked in a legal battle with Reliance Natural Resources, run by estranged younger brother Anil Ambani, over a gas-sales pact.
Bharti unseated Reliance Industries even though its shares have fallen 3.8 percent since it announced in May that it had renewed merger talks with South African peer MTN, nearly a year after the companies' prior talks fell through.
Bharti -- more than 30 percent owned by Southeast Asia's top phone firm Singapore Telecommunications -- has consistently added about 2.8 million subscribers a month, leading growth in an increasingly competitive space where rivals such as Vodafone have expanded networks rapidly.
Firms such as ICICI Prudential Asset Management, IDFC Mutual Fund, ING Investment Management and Principal Pnb Asset Management added Bharti stock to their portfolios, while Canara Robeco and DSP BlackRock dumped Reliance Industries from at least one of their fund's portfolios.
Bharti shares rose 2.4 percent in July, compared with an 8 percent rise in the broader market, while Reliance shares lost 3.3 percent.
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