AMCs rally up to 11% as SEBI defers decision to rationalise TER for MFs

Among individual stocks, HDFC AMC was locked at the temporary 10 per cent upper limit; Nippon Life India AMC surged 11 per cent in Friday's intra-day trade.

Shares of assets under management companies (AMCs) rallied up to 11 per cent on the BSE in Friday's intra-day trade after the market regulator, the Securities and Exchange Board of India (Sebi) deferred the proposal to regulate the total expense ratio (TER) of mutual funds (MFs) until a further consultation process is completed.

As per consultation paper seeking public comments, increasing transparency of TER was the key proposal.

Among individual stocks, HDFC AMC rallied past the 10 per cent temporary upper circuit and was quoting 11 per cent higher at Rs 2,273 on the BSE. The stock is in future & option (F&O) segment, which doesn't have any circuit limit.

Nippon Life India Asset Management surged 11 per cent to Rs 278.70, UTI AMC rallied 8 per cent to Rs 779.10 and Aditya Birla Sun Life AMC soared 6 per cent to Rs 393. In comparison, the S&P BSE Sensex was up 0.77 per cent at 64,398 at 09:55 AM.

SEBI is expected to come out with a second consultation paper on rationalisation of TER.

In our view, gradual rationalisation of expense will continue in long term. However, deferment of any decision on rationalization to provide breather for AMCs in near term, ICICI Securities said in a note.