RBI surprises with 50 bps rate hike

Welcoming the Reserve Bank's decision to hike key rates by a hefty 50 basis points, Finance Minister Pranab Mukherjee today said it will help bring down inflation to a comfortable level of 6-7% by year-end.

"The Reserve Bank of India has sought to give a strong signal to further moderate inflation and check inflationary expectations," Mukherjee said.

Inflation has remained stubbornly close to double-digit levels during the first quarter of the current fiscal. Mukherjee said the RBI rate hike was necessary to bring down inflation to an acceptable level at the earliest.

Overall wholesale price-based inflation stood at 9.44% in June. To tame the inflation monster, the RBI today hiked key policy rates by 50 basis points. "With this policy adjustment, we will be able to get back to a more comfortable inflation situation that takes us to the year-end inflation level of 6 to 7%," Mukherjee added.

The RBI has hiked its policy rates 11 times since March, 2010, to curb inflation. However, the problem persists. Mukherjee said although food inflation has moderated in recent months, pressure in manufactured items has hardened.

While coming out with its first quarterly policy review for the 2011-12 financial year, the RBI admitted that there has been a moderation in growth, but maintained its previous estimate of 8% GDP growth for the current fiscal.

Mukherjee said, "The overall GDP growth for 2011-12 so far is in line with the momentum attained in 2010-11." There have been concerns that the country's economic growth could see some moderation on the back of a deceleration in factory output growth in April-May.

Industrial output growth in April-May this year averaged 5.7%, compared to 10.8% in the same period last year.

Source: http://www.moneycontrol.com/news/economy/rbi-rate-hike-to-ease-inflationary-pressure-says-fm_569175.html

Franklin Templeton MF declares dividend for FT India Dynamic PE Ratio Fund of Funds

Franklin Templeton Mutual Fund has approved the declaration of dividend on the face value of Rs 10 per unit of FT India Dynamic PE Ratio Fund of Funds. The record date for dividend has been fixed as July 29, 2011.

The quantum of dividend will be Rs 0.440 per unit for individuals and HUF and Rs 0.377 per unit for others. The scheme record NAV of Rs 33.8048 per unit as on July 22, 2011.

The investment objective of the scheme is to provide long-term capital appreciation with relatively lower volatility thorough a dynamically balanced portfolio of equity and income funds.

Source: http://money.livemint.com/News/MF/MUTUAL-FUNDS/NEWS/144970.aspx

Sebi retracts on unique mutual fund folios

The domestic mutual fund industry will not have to provide unique folios of investors, as suggested by the Securities and Exchange Board of India (Sebi), following the capital markets regulator’s decision to retract from its earlier view.

Fund managers said the number of investors’ folios are already dwindling and such an exercise would have resulted in at least 30-40 per cent reduction in retail folios. According to latest statistics, the folios in the equity segment continued to slide in the June quarter. The industry lost more than half a million folios during the period, compared to the March quarter, while overall folios declined by 231,850.

H N Sinor, chief executive officer of industry body Association of Mutual Funds in India (Amfi), said: “Sebi has realised the difficulty in getting the number of unique folios and has asked the industry to continue with the old formula.”

Since the beginning of the current financial year, fund houses had been providing their unique investors count. “Earlier, if an investor had invested, say, in two schemes in a fund house, it was counted as two folios. However, as asked we counted it as one folio and provided the details to the regulator,” explained a top industry official. However, another top official said that it did not mean that an investor had investment only in one fund house. “An investor who has investments in more than one fund house, Sebi wanted that to be counted as only one folio (unique customer). And that was not an easy task and we conveyed our feedback to Amfi.”

Fund managers, Business Standard spoke to, said data sharing among fund houses was not common and counting unique customers was not possible and that resulted in the regulator’s opinion meeting its natural death.

“Even if fund houses provide their unique customers, it will still have multiple duplication and the system is not yet ready to get it out. Rather, the registrar and transfer agents like Karvy and CAMS are better placed to show the unique customers instead of fund houses,” said the chief marketing officer of a medium-sized fund house.

Things were confusing and the industry could not ascertain the unique customers in mutual funds. The confusion over this was evident from the fact that Sebi did not publish May’s folios after making statistics available till April. Industry officials said the penetration may not be even what it seems like from the retail folio number, which is close to 40 million. Roughly, they say, the number of investors may not be higher than 25 million. This could be a setback for the regulator which has been pressing hard for deeper penetration of mutual funds in the top 10 cities in India.

Source: http://www.business-standard.com/india/news/sebi-retractsunique-mutual-fund-folios/443847/