Moody's upgrade may trigger higher inflows in MFs - Views on News from Equitymaster

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Moody's upgrade may trigger higher inflows in MFs

Oct 11, 1999

Mutual fund (MF) managers are of the opinion that Moody's upgrade of India's sovereign outlook to 'positive' will attract higher inflows in the segment. This was reported by a leading business daily. India's sovereign upgrade is expected to enhance confidence of foreign investors. This in turn will trigger increased foreign institutional and foreign direct inflows in MFs.

The MF segment, which clocked inflows in 1HFY2000 equal to the whole of FY99, looks set to consolidate on its gains. Over the past week, there has been a spate of good news to cheer the MF investor. First, the S. A. Dave Committee has recommended that pension and insurance funds be allowed to invest in equities. Then foreign banks like Hong Kong and Shanghai Banking Corporation (HSBC) have firmed up plans to launch MF schemes in the country.

Now that the Bhartiya Janata Party (BJP) looks set to form the government, there is an anticipation of additional tax sops for MF investments in the next budget. (It must be recalled that Yeshwant Sinha’s tax breaks for the MF segment is what set the ball rolling for MFs in March 1999.) All this will lead to a spurt in inflows in MFs, especially in equity schemes.

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