Kotak Mutual's views -- Stable interest rates likely

S. Vaidya Nathan

KOTAK Mahindra Mutual Fund has said that the RBI seems to have come to the end of the road on what it can do to soften interest rates further.

Any decline in lending rates by the banks would depend on their ability to drop existing deposit rates.

The fund takes the view that a significant reduction in the deposit rates is not possible on account of the high administered rates offered by small savings. It may difficult to drop the small savings rate suddenly.

This is attributed to the huge maturity mismatch between the deposit liabilities of the postal savings and the deployments of these funds which is more or less done by the State Governments.

In this backdrop, the fund says that `although we see a surfeit of liquidity in the system, a large drop in the interest rates may not be likely'. Going forward, the fund expects a stable interest environment.

These views have been outlined by the fund in the wake of the 50 basis-point cut in the Bank Rate and 200 basis-point cut in the Cash Reserve Ratio announced by the RBI.

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Alliance'95 dividend: Alliance Capital Mutual Fund has announced a dividend of 20 per cent for The Alliance '95 scheme. The Alliance '95 Fund is a balanced scheme. The dividend applies for the Dividend Plan for period ended October 15. The NAV of the dividend plan on October 15 was Rs 25.70.

The record date for the dividend is October 15. The dividends are tax-free in the hands of the investors. The investment objective of The Alliance '95 Fund is long-term growth and income, through a portfolio with a target allocation of 60 per cent equity, 40 per cent debt and money market securities.

Pioneer ITI dividend: Pioneer ITI Mutual Fund has announced dividends in three of its schemes Income Builder Account, Monthly Income Plan and Treasury Management Account. For Pioneer ITI Income Builder Account (IBA) an open-end income scheme, a tax-free dividend of 1 per cent (Rs 0.10 per unit of face value of Rs 10) has been declared under the monthly dividend plan.

For the Pioneer ITI Treasury Management Account (TMA), a tax-free dividend of 0.145 per cent (Rs 1.45 per unit of face value of Rs 1,000) has been declared under the Weekly Plan. In Pioneer ITI Monthly Income Plan (MIP) an open-end income scheme with no assured returns, a tax-free dividend of 0.75 per cent (Rs 0.075 per unit of face value of Rs 10) has been announced under the Monthly dividend plan. The record date was October 23 for all three schemes.

Dundee dividends: Dundee Mutual Fund has announced dividends of 1 per cent for Dundee Sovereign Trust, 0.69 per cent for Dundee Corporate Bond Fund and 0.47 per cent for Dundee PSU Bond Fund schemes. These dividends are net of dividend tax. The record date for the dividend was October 15.

Morgan Stanley update: There has been a notable shift in the top holdings of Morgan Stanley Growth Fund. The top ten holdings now are Hero Honda, HDFC, Infosys Technologies, State Bank of India, Container Corp, HDFC Bank, Cipla, MTNL, ITC and Gujarat Ambuja Cements. The top ten holdings have a more diversified look than at any time in the past.

The fund has cash/cash equivalents of around 9 per cent. The net assets of the fund as of September 30 was Rs 652.22 crore. The value of non-performing assets is 0.17 per cent of net assets and illiquid stocks 1.28 per cent of net assets. The fund has no exposure in derivatives and investments in ADR/GDR of Rs 26.01 crore.

PruICICI short-term plan: Prudential ICICI Mutual Fund has launched a short-term plan under its Income Plan. The scheme was open for subscription in the initial offer period on October 18 and 19. The fund would invest in debt securities for the medium term with maturity of between three to six months with lower level of volatility. The plan is intended to offer investors a basket of debt products of various tenures.

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US-64 prices: The repurchase price for unitholdings of up to 3000 units will be Rs 10.20 per unit in October 2001 under the Special Liquidity Package, This is a rise of 10 paise over the September levels. The package was offered from August at Rs 10 per unit and is due to end in May 2003 at Rs 12 per unit. For holdings beyond 3,000 units, a repurchase facility at NAV-linked prices will be available from January 2.