The capital-market watchdog, of all possible agencies, has raised the demand that Unit 64 be turned into a savings scheme a la post office savings. This astounding suggestion relieves fund managers of all government connected mutual fund of any performance responsibility. When the going is good and the market is booming, fix the sale and repurchase prices at half the undisclosed NAV (depriving investors of returns earned on their units, which in the first place are bought at a premium) and when the going gets rough -- simply dump the mess on the government's lap. That way, nobody asks the market watchdog why it failed to raise an alarm about UTI's faulty policies even when a section of the media was relentlessly doing so since 1994. The best part is that instead of blaming fund managers/past chairmen for bringing down the institution, it is being made out as though it is the investors' patriotic duty to stay with UTI.

Change the look

Another suggestion. While convertingUnit-64 into a savings scheme as suggested by the regulator, how about the government selling UTI's super plush office in South Mumbai and add the money to the fund corpus. The trust can then give itself a typical post office look : regulation steel furniture, noisy ceiling fans and paan-stained staircases -- and of course government pay scales and perks.

Watch their moves

Now that Telco has breached the Rs 100 level, market watchers are waiting to see how one notorious fund reduces its losses in this scrip. The story goes that its top fund manager was among the privileged few who first test drove Telco's Indica. His reaction was to buy up huge amounts of Telco equity up to Rs 150. The relentless buying kept the stock up even when the company announced bad results. The market is watching to see if the fund buys more stock to average the price or has the guts to offload and book huge losses -- the latter could send the stock tumbling again. Telco, or rather Ratan Tata has other faithful believerstoo.

The Chairman of one of India's most respected companies with one of the best records of rewarding investors, is convinced that Telco was the kind of scrip which could turnaround and move up sharply. He even put his money behind his belief, by buying Telco at Rs 135. He plans to hold on and even buy more?

It doesn't trust SEBI

At the last inter-exchange co-ordination meeting, SEBI pulled up stock exchange chiefs for dawdling on its efforts to create a comprehensive broker database. When the Ahmedabad stock exchange was asked when it would submit its broker list, its executive director stunned the meeting by demanding to know what would SEBI do with such a list. He went on to say that the exchange strongly suspected that SEBI would misuse the information. SEBI was strongly displeased, but if it doesn't watch out, it will embolden others to be defiant too.

Confidence busters

Government officials usually express surprise at how bank and financial institutional (FI) scrips arecontinually hammered down by the market. The obvious reason is their unadmitted bad loans. First global broking says that really savvy fund managers are also worried about FI funding to sunrise industries such as software. They quote a fund manager who said ``How come these DFIs are giving five year loans to a sector where assets are written off in a couple of years?''. FIs, they say, are not only granting five year loans but principal repayment is on a bullet basis (i.e. at one shot).

Moreover the not-at-all-bluechip companies are being treated on par with the blue chips. This means that for the last two years, software companies are gtting away with clean funds. Clearly, investors are watching the FIs far more closely then they seem to realise.