Several issues arise with regard to UTI's performance and impact on the stock market. The wisdom of having a single player of such great size which can influence the supply-demand situation is limited. This leads to political use of the fund to "lift" market sentiments, which bodes ill for the huge fund's balance sheet. Also, rumourmongers can use the "threat" of a restructuring of the fund's debt-equity mix to bring down the market very easily.

The second issue is regulation, or the lack of it. Confusion surrounds who exactly tells UTI where it gets off. Sebi is unsure of its own status in the matter. An unregulated bunch of fund managers, however brilliant and responsible they are, managing a disproportionately massive chunk of funds deployed in the Indian market,constitute an almost unfailing disaster combination.

The third issue is that of transparency, and the fact that UTI still does not disclose its net asset value. The UTI chairman is reported to have commented that the repurchase prices of the US-64 units are not fixed purely on the basis of net asset value. But surely, the NAV figure is in itself a vital information that should be made available to the market? Markets around the world are crashing because of the Long Term Capital Management hedge fund disaster, where a less than $5 billion corpus worked up an exposure of over $200 billion. But with regulatory mechanisms, transparency norms and competitive rivals in place, panic has been restrained. India must put these infrastructure in place to achieve such stability.