DLF, Tata Motors, Shriram Finance, NMDC, Indian Overseas Bank, Hindustan Zinc stocks in focus on 2 Jan 2023 Indian share market outperformance is likely to take a breather in the first half of 2023, given relative valuations. However, India is still expected to have better growth than most parts of EM due to a relatively strong macro environment, analysts said. The market staged a smart recovery in the last week of 2022. The BSE Sensex rallied nearly 1,000 points to 60,841, and Nifty 50 jumped nearly 300 points to 18,105 level. “Q3 results and the upcoming Union Budget could provide much-needed fresh positive triggers to Indian equities. Auto sector is likely to be in focus this week on back monthly auto sales data. Metals too will be in focus after China announced to raise export duty on metals,” said Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services.Stocks in focus on 2 January, Monday Indian Overseas Bank: Ajay Kumar Srivastava has been elevated as MD and CEO of Chennai-based public sector lender Indian Overseas Bank (IOB) with effect from January 1, 2023 from his current position as ED. HG Infra Engineering: The company emerged the L1 bidder for a DMRC (Delhi Metro Rail Corporation) project. The bid was for Rs 412.11 crore, and the construction period is 24 months. Shriram Finance: The company has raised five-year loan of $100 million from the Asian Development Bank (ADB) through external commercial borrowing (ECB) under its social finance framework. The funds will be used for vehicle finance for commercial purposes with BS-VI compliant vehicles and electric vehicles. Hindustan Zinc: HZL, a subsidiary of Vedanta, is setting up a 0.5 million tonne (MT) per annum fertiliser manufacturing plant at Chanderiya in Chittorgarh district of Rajasthan, according to a senior company official. The plant, to be commissioned in the next two years, will mainly produce phosphatic fertilisers: di-ammonium phosphate (DAP) and NPK nutrients. HZL will be investing around Rs 2,500 crore to set up the fertiliser plant, which includes a roaster plant. Tata Motors: Tata Passenger Electric Mobility, a subsidiary of Tata Motors, has decided to complete the acquisition of Ford India’s manufacturing plant at Sanand in Gujarat on January 10, 2023. As a part of the acquisition, Ford India will transfer the entire land, buildings, and the vehicle manufacturing plant, along with machinery and equipment, for Rs 725.7 crore. Tata Motors will also retain certain employees. Jammu & Kashmir Bank: The lender has raised Rs 1,021 crore via allotment of 1,021 non-convertible debentures (NCD) with a face value of Rs 1 crore each. REC: the state-owned power project finance company has received board approval for the sale of its entire shareholding in WRSR Power Transmission to Adani Transmission. WRSR Power Transmission is owned by REC’s subsidiary REC Power Development and Consultancy (RECPDCL). Adani Transmission has emerged the winning bidder through a tariff-based bidding process. NMDC: Life Insurance Corporation of India pared its stake in the state-owned iron ore company by 2.07% via open market transactions. With this, LIC’s shareholding in NMDC is reduced to 13.699%, from 15.772% earlier. Religare Enterprises: Religare Finvest and parent company Religare Enterprises have entered into a one-time settlement agreement with 16 lenders for a full and final settlement of Religare Finvest’s dues. Religare Finvest has been taking necessary corrective measures as advised by the Reserve Bank of India, and will seek the removal of the CAP (corrective action plan) in due course, so that Religare Finvest can restart its lending business.
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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.