Stocks to buy: HDFC Life, Coal India among top money-making stocks; Nifty resistance at 18500-18550 By Shrikant Chouhan On Tuesday, the market finally came down with the support of the broader market. The sectors other than technology closed in the negative territory. The Nifty 50 index was at 18604, however, it closed at 18419 at the lowest point of the day. On a daily basis, the market closed at the lowest level of the previous day after a continuous run of nearly 12 days. During the same period, the market increased by 1150 points, however, the market must have taken a breather as the run-up was overextended. Stocks to buy L&T Finance Holdings BUY, CMP: Rs 92.25, TARGET: Rs 99, SL: Rs 89 The stock is trading into a rising channel pattern forming the higher top and higher bottom series on the weekly scale, post-breakout the counter witnessed a bit of a selling pressure which resulted in retesting of the trend line. Thus bullish continuation from the current level is very likely to remain in the near term. Coal India BUY, CMP: Rs 184.5, TARGET: Rs 195, SL: Rs 179 The stock had given a very impressive up move in the recent past by forming a bullish continuation chart pattern, presently due to some profit booking, there is a momentary pause in the uptrend however it seems that a strong reversal is very likely from the double bottom support zone on the daily chart for further upward movement. Tech Mahindra BUY, CMP: Rs 1,539.1, TARGET: Rs 1,620, SL: Rs 1,505 Post its decline from the levels of 1540 the counter went into a narrow range-bound movement and it came out of the range with a series of strong bullish candlestick patterns which should move the stock further on the higher side in coming sessions. HDFC Life Insurance CompanyBUY, CMP: Rs 702.8, TARGET: Rs 740, SL: Rs 685 The counter had been in a strong uptrend move however the recent price correction from its supply zone has plunged the counter to its important retracement support area, as a result the pullback rally is very likely from the current levels. (Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd. Views expressed are the author’s own.)
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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.