UTI net income rises to Rs 8,991 cr

US-64 scheme’s total net income for the nine-month period up to March 2000 stood at Rs 1,927 crore, representing a 62 per cent growth over December 1999 levels. US-64 reserves as on March 2000 stood at Rs 4,223 crore, over 31 times the reserves on June 1999. Overall, it constituted 46 per cent of UTI’s reserves during the period.

UTI faced a crisis of confidence in 1998 after reserves of its flagship US-64 scheme turned negative following a slump in Indian stocks after the country’s nuclear tests. But a subsequent bounce-back of the markets and a restructuring of the scheme helped UTI to erase its losses.

Sales of the US-64 scheme accounted for 23 per cent of fresh sales during the quarter. Individual investors accounting for 63 per cent of the sales. During July 1999 – March 2000, fresh sales under US-64 amounted to Rs 2,237 and in March alone to Rs 706 crore. In April, the scheme has so far recorded sales of around Rs 266 crore. Redemptions from July 1999 to date stood at Rs 1,963 crore.

Sales of all schemes crossed Rs 10,000 crore as on March 31, 2000. Net sales stood at Rs 2,491 crore as compared to negative sales of Rs 3,349 crore in the corresponding period of the previous year. Reserves and surplus rose to Rs 9,202 crore from the Rs 1,492 crore on June 1999.

Investible funds of all domestic schemes of UTI (excluding VECAUS) as on March 2000, rose to Rs 72,487 from Rs 60,452 crore on June 1999. US-64 was again major contributor to the increase, the institution said.

25% cap on new economy shares: UTI, India’s largest mutual fund, plans to cap its exposure in new economy stocks at 25 per cent of its total portfolio, but chief PS Subramanyam said his faith in the sector remained strong. UTI’s current holdings of new economy stocks in technology, media and communciation sectors is 25 per cent.

"I don’t have a doubt that new economy stocks will do well," UTI chairman Subramaniam said on Thursday, despite recent global concerns over valuations in these sectors. "We plan to shuffle the exposure, but retain the 25 per cent limit," he said.

He said UTI’s investments were in firms with strong management and technical teams, with revenue streams and rising profits. The UTI chairman said these firms also had an advantage that more than 80 per cent of their business came from offshore business. Even if that peaked over the next 2-3 years, domestic opportunities were likely to be tremendous.

Sensex to touch 6,000: Subramanyam was confident the stock market would reach the 6,000 level by October 2000, buoyed by strong corporate performance and economic fundamentals. The benchmark BSE Sensex has tumbled 24 per cent from its all-time high of 6,150.69 in mid-February, with investors burning their hands amid extreme volatility and uncertainty about the market direction.

"More than 75 companies which have released earnings numbers so far, have posted handsome increase in turnover, profits," Subramanyam said. With a greater emphasis on modernisation and technology, Indian product quality had improved and corporates could have higher exports, he said. He said continuing purchases by foreign funds right through the market volatility was indicative of their faith in the Indian economy.