While the investment scenario improves and efforts are made to increase the level of infrastructure in India, regulators and intermediaries in the game should be looking at providing reliable data, especially of key market participants like the foreign institutional investor?s trades and mutual fund data. At the moment there is a huge discrepancy in the data that the exchanges provide and the data that the Securities & Exchange Board of India (Sebi) provides.
Analysts reckon that one of the reasons for the difference is because the exchange data does not capture inflows on account of primary offerings while Sebi data does. However, during financial year 2009, when there were hardly any primary offerings, the difference between the data reported by the exchanges and that by Sebi was to the tune of $5 billion, says a report complied by CLSA Asia Pacific Markets? analysts. Similarly, the annual data on investments made by mutual funds also has a divergence between two data sources, Sebi and the Association of Mutual Funds in India (Amfi). One of the reasons, say experts, is because Sebi reports data on transactions done by funds on the exchanges, which is the secondary market, and does not include primary market investments. Fund managers also reluctantly agree that there could be semantic differences in the way equity schemes are defined and could lead to deviations.
Analysts also note that the inflow reported by Amfi is done before considering commissions, entry loads and other similar charges. These total charges are estimated to be around 3.5% of the inflows (or Rs 16,400 crore for financial year 2004-09) and this again lowers the actual amount of money available to the fund house for investmens. The CLSA report adds that this equity-inflow number do not adjust for the dividend payments.
These are estimated to be 5% of inflows as per industry participants, made by the fund houses on equity-related schemes, which are effective outflows and need to be deducted from the monthly fresh inflows reported by Amfi. These factors will become additional parameters for Indian markets to increase their credibility with the investing community. There is a dying need for standardisation of such critical data so as to facilitate better decision making.
akash.joshi@expressindia.com