| . | The effects of the globalization
of the economy on the Indian Stock Markets showed up in all its fury during
the last week when the SENSEX dropped by a whopping 361 points on a single
day. With the judgement on Microsoft monopoly case going against the company,
technology stocks on Nasdaq came down causing a sympathetic fall in the
Indian stock markets. Simultaneously the rumour about IT action on Mauritius
based FIIs caused a panic situation in the market and wiped away about
Rs 65000 crores in Market Capitalization in a single day. Fortunately,
the markets did bounce back the following day with Indian stocks on the
Nasdaq and New York stock exchanges performing very well. The drama however
reminds us on how the international developments have established a close
relationship with the fortunes of the Indian Investors. It also warns the
finance ministry that any attempt to go back on the promises made to the
stock markets can have disastrous consequences.
In the meantime as a fallout of the Budget as well as the New Credit Policy of the RBI, the interest rates on Bank Deposits dropped by another 1 %p.a. Most of the prime banks have now reduced the Fixed Deposit rates at the long maturity end to less than 10 % pa. Traditional Bank investors will therefore have to shift more of their Bank Deposits to Mutual funds. We had some time back discussed about the Kothari Pioneer Internet Opportunity Fund. Recent fall in the prices of technology stocks has not allowed the fund to show the spectacular results that the investors had come to expect from Kothari. However, the fund should do well in the next quarter and there is no cause for concern. If any thing, the fund is again available around par value and some more investments can be thought off in the fund. In the meantime, those conservative investors who are moving out of Bank Deposits can look at another mutual fund scheme namely ING Balanced Portfolio. This is an open ended fund and the initial offer of units of Rs 10 at par opened on March 15. The scheme will close its subscription on April 17 th and then reopen on May 4th for daily buying and selling based on NAV(Net Asset Value). The ING group is a well known global financial institution from Netherlands having interest in Banking, Insurance and Mutual Fund management. Even though the Group is a recent entrant to the Indian Mutual Fund industry, it has a huge experience base behind it and is the fourth largest European Financial Institution by assets. On the strength of its pedigree, ING Balanced Fund appears to be an attractive scheme for moderate risk seekers. Being an open ended fund, investors can deposit or withdraw funds from the scheme on a continuous basis like in a Savings Bank account. The fund proposes to charge an entry load of 1.5 % on sales made after May 4th. The minimum amount of investment and also the minimum balance to be maintained subsequently is Rs 5000. Further purchase and sale can be made in multiples of Rs 1000 each. Withdrawals from the scheme would be available by way of sale of units at the then prevailing NAVs and there will be no Exit load. Investors will have the flexibility of choosing either the Dividend plan or the Growth Plan for investment. Investors can also avail of the "Systematic Investment" and "Systematic Withdrawal" plans where they can deposit or withdraw a fixed sum in periodical instalments such as say Rs 1000 per month. The Systematic Investment Plan is an ideal substitute for a "Recurring Deposit" and can be used by young salary earners. The Systematic withdrawal Plan is an excellent option for those investors who earlier used to deposit their savings in a Bank and live out of the interest income. While there is no guarantee from the fund about the rate of return that they may be able to provide, the fund will invest between 55% to 80 % of its collection in equity and 20% to 45% in longterm and short term debt instruments. In view of this, the fund would have the flexibility in switching between equity and debt as required. As a result it may not be difficult for the fund to provide an annualized return of over 25 % after an initial stabilization period of about 6 months. Na.Vijayashankar
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