CCD goes cold in grey market

Shares of Coffee Day Enterprises, the company that runs the pan-India Cafe Coffee Day (CCD) outlets, are quoting at a premium of only three to five per cent in the grey market, indicating tepid demand. The company's Rs 1,150 crore initial public offering (IPO) opens for subscription on Wednesday.

Investors applying for 45 shares (one lot) are getting paid around Rs 500 by grey market operators. Experts, however, said the grey market currently isn't as vibrant as it used to be in the past and may not be able to capture the real trend. The grey market activity could once again pick up when IndiGo Airlines' parent company, InterGlobe Aviation, hits the market at the end of month.

Samie Modak

Few takers for Sumit Bose committee report
While the market regulator, Securities and Exchange Board of India, believes the Sumit Bose committee's recommendations should be implemented by the mutual fund sector, there seems significant resistance from players. Most believe the guidelines are good but they can only be implemented in ideal circumstances. "With competing sectors like insurance paying much more to their agents, how are we supposed to compete and grow by paying so little money to distributors?" asks the chief executive officer of a fund house. The issue will be taken up when Sebi's Mutual Fund Advisory Committee meets on October 29.

Joydeep Ghosh

Dividend stripping schemes draw investors
A few fund houses have mopped up substantial assets by launching dividend stripping schemes in the recent past. They have informally guaranteed effective returns of up to 25 per cent to wealthy investors if they remain invested till January next year, said sector watchers. Since such schemes are a huge draw among investors, it has helped fund houses garner quick assets. Like bonus-stripping, dividend-stripping schemes, too, try to exploit a tax anomaly to maximise returns. Last year, the industry body, Association of Mutual Funds of India, had expressed its unhappiness to fund houses about bonus stripping.

Joydeep Ghosh