Mutual Fund Newsletter – July 07 to 11, 2014

India Infoline News Service | Mumbai |

Mutual funds purchased shares worth Rs. 3,339 crore in the month of June, while they invested Rs. 68,000 crore in the debt market during the period, according to SEBI

News this week

Minimum holding period for capital gain benefit on debt fund now 3 yrs
Finance Minister Arun Jaitley on Thursday in his maiden budget proposed to raise long-term capital gains tax on debt-oriented mutual funds to 20 per cent from 10 per cent, to bring parity with banks and other debt instruments. However in the Budget 2014-15, it has proposed to increase the period of holding in respect of long term debt funds units from 12 months to 36 months. In the case of debt mutual funds, the capital gains arising on transfer of units held for more than a year is taxed at a concessional rate of 10 per cent, whereas direct investments in banks and other debt instruments attract a higher rate of tax. This allows tax arbitrage opportunity.

"With a view to remove this tax arbitrage, I propose to increase the rate of tax on long term capital gains from 10 per cent to 20 per cent on transfer of units of such (mutual funds other than equity oriented funds) funds," Union Finance Minister Arun Jaitley said in his Budget speech in Parliament. These amendments would be effective from April,1 2015 and will accordingly apply, in relation to the assessment year 2015-16 and subsequent assessment years.


MFs invest Rs. 68000 cr in debt market in June
Mutual funds (MFs) purchased shares worth Rs. 3,339 crore in the month of June, while they invested Rs. 68,000 crore in the debt market during the period, according to SEBI (Securities and Exchange Board of India). The inflows in equities during June followed a net investment of about Rs. 105 crore in the preceding month. Prior to that, fund houses have been net sellers in the equity market since September last year, while they were net buyers of shares worth Rs 1,607 crore in August. In the first half of 2014, mutual funds sold shares worth over Rs 7,000 crore, while they invested Rs 3.75 lakh crore in the debt market during the period, the data added.

New norms on delivery instruction slips from Oct: SEBI
The Securities and Exchange Board of India (SEBI) on Friday said its new framework to strengthen the supervisory and monitoring role of depositories and their participants for issuance and processing of Delivery Instruction Slips will come into force from October. According to the earlier plan, the new rules were to take effect from July 7.

A DIS is used by sellers of securities to instruct their depository participants to debit their demat account. SEBI said: "In light of the difficulties expressed by the depositories and the depository participants (DPs) and considering their request, it has been decided to make the circular effective from October 01, 2014... Read more


To enhance PPF allocation to Rs. 1.5 lakh/yr: FM says
The Union Budget 2014-15 announced on Thursday has provided some relief for tax payers and small savers. Currently the maximum amount eligible for deduction through permissible investments under 80C of the Income-Tax Act is Rs. 1 lakh. This has been enhanced to Rs. 1.5 lakh. The maximum amount that can be invested under the public provident fund (PPF) has also been increased to Rs. 1.5 lakh per annum from Rs. 1 lakh currently.

Budget: An attempt to improve business climate, ICICI MF says
The Finance minister has indicated that the present government is taking a long term view for bringing back the economy on track on a sustainable basis. The focus on legislative and administrative reforms is a good indication. Similarly expenditure commission, subsidy overhaul, FDI in many sectors is a very welcome step is executed effectively. The attention given to health care, transportation, education and energy requirements is good. Nimesh Shah, MD & CEO, ICICI Prudential AMC, said, “One thing that stands out is the tax concessions for the middle-class that will mean more surplus funds in the hands of investors that can be channelized towards financial savings. The budget also does an admirable job of balancing the need for fiscal consolidation while providing impetus for sectors like infrastructure and manufacturing. There is an attempt to improve the business climate by streamlining procedures, which should encourage investments. It also gives a sense of the long term direction on issues such as GST, DTC etc.”... Read more

Well-balanced budget with catalyst role: IDBI MF
The Finance minister has indicated that the present government is taking a long term view for bringing back the economy on track on a sustainable basis. The focus on legislative and administrative reforms is a good indication. Similarly expenditure commission, subsidy overhaul, FDI in many sectors is a very welcome step is executed effectively. The attention given to health care, transportation, education and energy requirements is good. SN Baheti, MD & CEO, IDBI Asset Management, said, the Budget provides strong stimulus to several strong pillars for sustainable economic growth. Budgetary focus on infrastructure sector, savings and investments will play a catalytic role... Read more

Union Budget outlining its policy priorities and fiscal targets: Axis MF
The government presented the Union Budget for the financial year 2014-15 outlining its policy priorities and fiscal targets. The government aims for returning growth to a range of 7-8% over the next two years while keeping inflation low. The budget commits the government to a strict fiscal roadmap that takes the  Union Budget for the financial year 2014-15 outlining its policy priorities and fiscal targets. The government also committed to a stable tax regime and the finance minister said that retrospective tax changes would be normally avoided. The government also took steps to encourage investment in India including from external sources. Rules for Foreign Direct Investment have been liberalized across several sectors including defense, insurance and real estate.

Budget focus on speed, scale and skill: HSBC Global Asset
This is a budget that focuses on Speed, Scale and Skill. Speed - the push is for quick and time bound decisions, Scale - there is a lot of emphasis on improvement and more importantly expansion of infrastructure across a wider geography and Skill - the effort is to improve the capability of individuals at the rural/small scale level to make them self sustained.

Overall a good budget: LIC Nomura MF
The Finance minister has indicated that the present government is taking a long term view for bringing back the economy on track on a sustainable basis. The focus on legislative and administrative reforms is a good indication. Similarly expenditure commission, subsidy overhaul, FDI in many sectors is a very welcome step is executed effectively. The attention given to health care , transportation, education and energy requirements is good.

If the government is able to deliver on these proposals, then it will definitely help in achieving the Fiscal deficit targets and also rejuvenate the Indian economy. On Financial sector, the single KYC and Demat account is a welcome step along with the income tax exemptions and limit extension... Read more


Piramal Fund Management launches ‘Indiareit Apartment Fund’
Piramal Fund Management has launched a new fund targeting buying of individual residential units – ‘Indiareit Apartment Fund’ seeks to acquire residential units in Tier 1 markets at a significant discount to prevailing market price, by offering a bulk purchase to the developers. The target fund size is INR350cr (+ a green-shoe option of a further INR350cr) with an average deal tenure of 2-3 years per transaction. The Fund is specifically targeted towards those individuals who, beyond a primary home, look to invest directly into real estate as an asset class.

FIIs pump in over $20bn first half of 2014
Overseas investors have invested over $20 billion into the Indian market in the first half of the year. The net investments by foreign investors into equity markets stood at $9.96 billion during January-June 2014, while the same for debt markets was at $10.42 billion taking the total to $20.4 billion. FIIs (Foreign institutional Investors) have helped in pushing up the benchmark BSE Sensex by over 20% in the first six months of the year.
 

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