BUDGET 2000
SPECIALS
INTERVIEWS
COMMENTARY
GOVT&ECONOMY
Y2K: BIZ FEATURES
INDIA & THE WTO
CREDIT POLICY
BIZ IN THE USA
CARS & MOBIKES
MANAGEMENT
CASE STUDY
BIZ-QUIZ
USEFUL INFO
ARCHIVES
NEWSLINKS
SEARCH REDIFF

UTI chief forecasts market revival

Unit Trust of India chairman P S Subramanyam today said the capital market is poised to improve after a correction.

"No matter what is happening now, market will look up, considering its strong fundamentals," he said in Calcutta.

Referring to the sharp decline in NASDAQ, which is directly affecting sentiments of the Indian market, Subramanyam said that a correction has been overdue in Indian bourses. There is no direct relation beteen NASDAQ and Indian bourses, he pointed out.

Hardly two Indian companies are listed on the NASDAQ. It is not fair to compare the fluctuations there on grounds of globalisation, he said.

Subramanyam said the Indian economy is on a sound footing than ever before. The 2000-2001 Union Budget proposals that increased dividend tax, have severely affected the market sentiment. This reaction was uncalled for, he opined.

He said the world over, valuation of a particular stock had not depended on announcement of dividend, but on different steps taken by the management such as reduction in cost, introduction of new technology and market capitalisation.

Subramanyam said dividend tax is being seen in a negative perspective as companies feel it will discourage them from paying higher dividend. He said things would change if the fund thus available is utilised for modernisation and improving profitability.

It hardly matters to an investor if a company announced even 100 per cent dividend and the market price of its share is Rs 1,000, he said. "I'm sure the sentiments will improve if Indian investors change their perspective. Then, the market would start behaving in a positive way," he said.

To a question on whether the Securities and Exchange Board of India should ban short-selling, the UTI chief said, it is for the SEBI to decide. "I think they will discuss the matter in today's meeting."

"India is well poised to emerge as an economic power and that too on solid fundamentals. Interests rates are coming down which will reduce the cost of borrowing of corporates. This is going to be an important contributing factor for higher profits and higher market capitalisation," Subramanyam said.

Indian industry will have enormous opportunities to export goods in the wake of considerations, he said and added that in next two years, mergers and acquisitions will become more pronounced.

UTI ready to fund companies' voluntary retirement schemes

UTI has finalised plans to launch a fund for financing the voluntary retirement scheme, or VRS, for large and medium companies, Subramanyam said.

The fund will provide support to the corporates who are willing to introduce VRS but are unable to implement it for want of sufficient funds, he said.

Subramanyam said at present 30 to 35 companies were working with UTI to make a beginning of the fund, the exact name and the final modalities of which would be decided at the UTI board meeting slated for April 27.

"We want to frame the scheme in such a way that investors will be employed themselves," he said, adding that UTI would invite subscription from anybody for forming the initial corpus of the proposed fund.

UNI

Business