Shah: Looking to expand the MF investor base

There's apprehension that a correction may be around the corner in the stock market. So, fund managers are now looking to launch schemes that are more stable than the regular ones. Many mutual funds (MFs) are, therefore, launching hybrid plans with a combination of equity and derivatives (E&D) in order to provide steady, albeit, lower returns. "E&D funds target those who like to park their money in bonds and FDs; this will help us expand the mf investor base," says Nilesh Shah, Chief Investment Officer, Prudential ICICI Asset Management Company.

For example, Prudential ICICI's Wealth Optimiser Plan proposes to use various derivative strategies like index arbitrage, options, and cash futures arbitrage to generate returns. "The product will also have an unhedged equity exposure of up to 5 per cent of the portfolio value. This will be used to opportunistically invest in IPOs and other large-cap stocks," says Shah. The idea is to generate returns in line with balanced funds in cheap market situations, and to hedge downside risks in stretched market situations.

Other MFs are also following this strategy. Mihir Vohra, Head (Fund Management), HSBC, while announing the launch of the Tax Savers Equity Fund, an open-ended equity-linked saving scheme, says: "We are looking at hybrids as well to address this market." Reliance, SBI, DSP Merrill Lynch and LIC are also looking at hybrid options and reorienting their existing schemes accordingly.

-Amit Mukherjee

Respite From Telecallers Still Some Way Off

How many times have you received calls from telemarketers offering you housing loans, personal loans, credit cards, insurance and the like? Your irritation is being addressed. The Telecom Regulatory Authority of India (TRAI) has issued a consultation paper on "Unsolicited Commercial Communication" and has invited comments from stakeholders-telecom operators, banks and other agencies that use telecom services for advertising, marketing and sales and the public at large-on the issue. The paper, incidentally, talks of penalising violators. "The aversion of many subscribers towards invasion of privacy and the nuisance of telemarketing has found expression in a different fora. There have, thus, been attempts to resolve this problem, but the current solutions are fragmented and have not been comprehensive," says TRAI. The exercise will take about three months to complete and TRAI will issue comprehensive guidelines based on these comments.

-Shaleen Agrawal

Textile Companies go Shopping Abroad

There's a mad scramble among Indian textile companies to buy up foreign companies, or tie up with them for technical or brand alliances. Companies like GHCL (Gujarat Heavy Chemicals) and Alok Industries have acquired companies abroad. Export-oriented companies like Raymond, Welspun India and Himatsingka Seide have also ramped up their presence in overseas markets.

But Jigar Shah, Managing Director, KR Choksey Securities, an equity research firm that actively tracks textile companies, warns: "It's still too early to say 'the Indian textile industry has arrived'. We're still at the stage when overseas takeovers merely give us a toehold in the developed market. We have to now differentiate ourselves to be able to leave our mark."

-Pallavi Srivastava

Funds for the Common Man

The socio-economic ministries have drawn up (or are in the process of drawing up) ambitious, and mostly expensive, wish lists they want Finance Minister P. Chidambaram to fulfill in the next Budget. Here's a sneak peak at what they want:

-Amit Mukherjee

MINISTRY OF LABOUR AND EMPLOYMENT

» Social security cover for the unorganised sector (93 per cent of the workforce):
Rs 25,000 crore
» National child labour project across 498 districts: Rs 1,204 crore
Vocational training and modernisation of ITI: Rs 900 crore

MINISTRY OF RURAL DEVELOPMENT
Rural employment guarantee expansion
Training of rural artisans in marketing, packaging and branding
Bharat Nirman (roads, rural housing, roads, electrification):
Rs 38,000-41,000 crore

MINISTRY OF URBAN DEVELOPMENT AND POVERTY ALLEVIATION
Jawaharlal Nehru Urban Renewal Mission:Basic services and urban infrastructure:
Rs 3,000 crore
Integrated housing and slum development: Rs 1,500 crore
Low-cost sanitation: Rs 70 crore
National Building Organization: Rs 15 crore
Other housing schemes: Rs 10 crore

MINISTRY OF HEALTH
National Rural Health Scheme: Rs 40,000 crore

MINISTRY OF TRIBAL AFFAIRS
Tribal welfare programmes like scholarship schemes, research & training (including vocational training) in tribal districts, development of backward tribal groups and aid for National Institute for Tribal Affairs: Rs 1,800 crore

MINISTRY OF AGRICULTURE
Improving farmers compensation package
Improving irrigation: Rs 3,500 crore

Price War in Motown

Tata motors, which launched a new Indica with a smaller engine to take advantage of the reduced excise duty on petrol cars with engines below 1,200cc, has also launched a special limited period discount of Rs 25,000 on the car, bringing its price down to Rs 2.30 lakh (ex-showroom Delhi). This places it squarely in Maruti Alto territory. Maruti has countered with a Rs 11,000 discount on the Alto, which is India's best selling car (it sells about 20,000 units every month). The base Alto has an ex-showroom (Delhi) price of Rs 2.33 lakh (pre-discount). And while sales of the venerable Maruti 800 have slowed down to under 10,000 units a month, Maruti, which feels the new Indica XETA GV might bite into its sales, is offering a Rs 15,000 discount on the 800, making India's cheapest car (Rs 1.96 lakh ex-showroom Delhi) even cheaper. This price war indicates that Tata Motors is putting its gloves on before Maruti comes out with the long-anticipated Swift Diesel, which will compete squarely with the Indica Diesel.

-Kushan Mitra