Sensex underperforms mid-, smallcaps; volatility to remain till weekly F&O expiry, Nifty support at 15750 Domestic equity market benchmarks BSE Sensex and Nifty snapped the 6-day losing run, and ended the choppy session up nearly half a per cent on Monday. BSE Sensex ended 180 points or 0.34 per cent up at 52,974, while NSE Nifty 50 index was up 0.4 per cent or 60 points at 15,845. Index heavyweights such as Housing Development Finance Corporation (HDFC), HDFC Bank, Kotak Mahindra Bank, ICICI Bank, and State Bank of India (SBI) contributed the most to the indices’ gain. Broader markets outperformed the equity frontliners. S&P BSE MidCap index jumped 1.5 per cent or 329 points to end at 22,145.10. S&P BSE SmallCap index was up 1.15 per cent or 290 points to settle at 25,606. Analysts say that the broader markets witnessed keen interest in companies likely to post good numbers during the first quarter of the current fiscal. S Ranganathan, Head of Research at LKP Securities Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities The recent spate of negative news have prompted investors to cut equity exposure. At one point, benchmark indices were going great guns, but profit taking once again saw the markets pare most of their early gains to end marginally higher. There are concerns that rising interest rates to quell higher inflation could hurt growth and may result in further correction. The Nifty moved within a range of 15765-15950 and the texture of the chart suggests a strong possibility of the continuation of a range bound activity in the near future. For the bulls, 15950/53300 would be the immediate resistance level and above the same, we could see a sharp intraday pullback rally till 16000-16100. On the other hand, 15750 could be the immediate support level, and below the same chances of hitting 15700-15600 would turn bright. Rupak De, Senior Technical Analyst at LKP Securities Nifty continues to consolidate in the narrow range as the benchmark index has failed to give any directional movement. Sideways pattern may continue as long as Nifty stays within a tight band of 15800 and 16000 on a closing basis. A decisive breakout on either side may induce a decent move in the direction of the breakout. Vinod Nair, Head of Research at Geojit Financial Services Continued selling by FIIs as they chase high yield US bonds restricts the Indian market to hold on to its pull-back rally, despite interest from the domestic investors. Weakness in global equities along with the unfavourable global cues led to heavy selling towards the closing hours, as the investors lacked confidence to take forward their positions. The investors are currently on a risk deleveraging phase, hunting for safe-haven investments. Sumeet Bagadia, Executive Director, Choice Broking Technically, after forming the bearish candle on the weekly chart, the index has formed a Doji candlestick on the daily chart which shows indecisiveness among the trades. Moreover, the index has also faced a resistance from falling trend lines and showed profit booking from higher levels. However, Fibonacci retrenchment also has support around 15650 levels. Traders may find buying opportunities for short term as if 15650 levels is protected. In the hourly chart, with support of the middle Bollinger band short term upside movement is expected. Stock specific action would drive the market in coming days too. On the derivatives front, the highest call OI is at 16000 strike price followed by 16200 strike prices while on the put side, highest OI is at 15500 strike price. India Vix closed at 24.53 with gain of 4.43 percent intraday indicating volatility is going to remain till weekly expiry. On the other hand, Nifty Bank has support at 32600 levels while resistance is placed at 34500 levels. Mohit Nigam, Head – PMS, Hem Securities On the technical front, the key resistance levels for Nifty 50 are 16000 and on the downside 15700 can act as strong support. Key resistance and support levels for Bank Nifty are 34100 and 33000 respectively.
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In its consultation paper, Sebi has suggested that trustees of mutual funds should focus on market abuse by AMC, its employees and mis-selling by the AMC to increase the asset base.
Also, trustees should be responsible for fairness of fees and expenses charged by the AMC, compare its performance with peers and ensure that AMC’s sponsor is not getting any undue advantage.
In addition to the core areas, the trustees should be responsible for periodically reviewing the steps taken by AMCs for the folios which do not contain all KYC attributes with bank details.
Further, Sebi has suggested that trustees and their resource persons should independently evaluate the extent of compliance by AMC and not merely rely on AMC’s assurances.
To facilitate trustees’ supervision, AMCs should provide them with analytical information.
Presently, the trustees primarily rely on the AMCs for ensuring compliance with the applicable rules.
Under the rules, trustees hold the property of the mutual fund in trust for the benefit of the unitholders. The trustees appoint an AMC to float schemes for the mutual fund and manage the funds mobilised under various schemes, in accordance with the investment objectives.
“In view of the increasing scale and reach of the mutual fund industry, trustees’ role in respect of unitholders’ protection assumes even greater significance,” Sebi said on Friday.
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Over the past decade there has been a five-fold increase in the size of the mutual fund industry. The assets under management (AUM) has surged from Rs 7.93 lakh crore in November 2012 to Rs 39.89 lakh crore in December 2022.
To ensure that trustees devote time and attention to their core responsibilities, Sebi has suggested that for fulfilling other responsibilities, trustees may rely on professional firms such as audit firms, legal firms, merchant bankers for carrying out due diligence on their behalf.
The Sebi also listed some duties trustees can delegate to AMCs. This include ensuring that all systems are in place prior to the launch of any scheme by the AMC, and calculating any income in the mutual fund due to the fund and any income received in the mutual fund for unitholders.
The regulator has proposed to provide a one year time to existing trustees with board of trustee structure to convert into a trustee company, from governance point of view.
Presently, two structures for trustees are permitted — corporate and board of trustees structure. Moreover, there are a few mutual funds which have the board of trustees structure while the trustees of all other mutual funds have adopted the structure of a trustee company.
Considering the enhanced role of trustees over the period of time, Sebi has suggested to increase the minimum number of trustees to adequately perform their functions. Presently, the minimum number of trustees prescribed is four.
Also, it has been proposed that the chairperson of the trustee company should be an independent director.
Sebi has suggested that apart from the meeting of the audit committee of AMCs and trustees (which mostly comprises of independent directors), the board of AMCs and the board of trustees may be mandated to meet at least once a year to discuss the issues concerning the mutual funds.
The regulator proposed that the existing MF Regulations on AMC and its obligations may be amended to include additional clauses with respect to the obligations of the board of AMC.
The proposed amendment may include a clause which casts an obligation on the board of AMC to ensure that all the activities of the asset management company are in accordance with the provisions of these regulations.
The Securities and Exchange Board of India (Sebi) has sought comments from public till February 24 on these proposals.
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