DSP Merrill investments -- Confident on equity market

S. Vaidya Nathan

DSP MERRILL Lynch has, in its latest quarterly newsletter, struck a confident note regarding the equity market.

The Chief Investment Officer, Mr R. Sreesankar, has stated that: ``We remain confident on the future direction of the Indian equity market, though we expect volatility to remain a part of the dynamics of the market for some time to come.'' The fund has indicated that it is confident of the market for the following reasons:

``The fundamentals for the corporate economy remain relatively strong and the view on the fixed income markets and interest rates further underpins the likelihood of an equity market recovery over the next few months.

The second quarter results may well provide the trigger for the next market move. Results for the last quarter have, across sectors, been pretty much in line with, or above, analysts' expectations. This trend is expected to continue.

The valuations appear eminently reasonable, underpinned by expected earnings growth.

Our visits to companies and our research gives us further comfort that corporate management is largely comfortable with business prospects, particularly in the technology sector.''

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The fund has indicated that risks persist in terms of macro-economic adversities, particularly those driven by oil prices _ such as the containment of the oil pool deficit and the balancing act on the rupee in the short term, and in the longer term the perpetual balancing act on the fiscal deficit.

The top ten equity holdings of the DSP Merrill Lynch Equity Fund are Infosys Technologies, Satyam Computer, SIP Technologies, Sonata Software, Grasim Industries, Hindustan Lever, ITC, Reliance Industries, Sterlite Optical and DSQ Software.

As far as the debt market is concerned, the fund has indicated that in its view, interest rates have peaked for the short term and are likely to consolidate around the current levels. The fund expects a robust macro-economic backdrop as a result of the good monsoon and ample liquidity in the economy to support its favourable interest rate scenario. The fund has indicated that global oil price trends and the exchange rate environment will be critical in determining the interest rate environment and volatility. The fund has tightened exposures in the short end of the market.

Cangilt dividend: Canbank Mutual Fund has declared a third income distribution of 1.25 per cent on its Cangilt (PGS) scheme for the income plan. This dividend is taxable in the hands of investors. The fund has so far distributed 6.25 per cent since its launch in December 1999. The record date for the latest dividend is November 7, 2000. All unitholders whose names appear on the register of members as of this date are eligible for the dividend. The Cangilt scheme has a corpus of Rs 156 crores as of end-October. The fund has posted a total return of 8.02 per cent since launch.

Zurich High Interest: Zurich India Mutual Fund has fixed November 3, 2000 as the record date for determining unitholders who will be eligible for the payment of dividend/income distribution for Zurich India High Interest Fund (Dividend Plan). All unitholders of the plan as on the record date will be eligible for the dividend. The NAV would be ex-dividend on the next business day.

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SBI Funds' load structure: SBI Mutual Fund has announced that it has decided to revise the entry load on the following schemes from 1.50 per cent to 1.75 per cent. The schemes in question are Magnum Equity Fund, Magnum Multiplier Plus 1993, Magnum Balanced Fund, Magnum Tax Gain Fund and Magnum Sectors Funds Umbrella (comprising the IT Fund, Pharma Fund, FMCG Fund and Contra Fund). The changes are effective November 1. There is no exit load for the existing equity and balanced schemes.

US-64 prices: The Unit Trust of India has fixed the sale price and repurchase price for US-64 at Rs 13.90 per unit and Rs 13.60 per unit respectively for October. These prices represent a 10-paise rise over the September prices.