Street Signs: Govt loses Rs 20,000 cr on dividend stripping, say experts

Dividend stripping is a malaise that both the mutual fund (MF) industry and the tax department have been unable to plug in all these years. According to MF industry experts, the tax department loses in excess of Rs 20,000 crore annually, which can go up to Rs 30,000 crore in a bad year. Several fund houses in the past have been known to use this strategy of declaring dividends to shore up their assets in the short term. “The government can tackle this by making some minor changes in the tax laws,” says an industry official.

Joydeep Ghosh

 
Freak trade in ICICI Bank
 
Last Thursday, shares of ICICI Bank fell as much as 10 per cent on the National Stock Exchange (NSE) on account of a freak trade, said brokers. According to sources, a dealer placed a trade for over 750,000 shares traded for Rs 261.55 even as the stock was trading at much higher levels. The ‘fat-finger’ trade saw the bank’s stock plummet to Rs 261.55 compared to day’s high of Rs 293.4. A similar fall was not seen on the BSE, where shares moved in a narrow three per cent band. A source said the broker has requested the exchange to annul the trade. 

Samie Modak

 
Surge in MF flows amid market fall
 
Equity mutual funds (MFs) saw a surge in inflows when the markets came off sharply in the previous trading sessions. Industry players say distributors and fund houses saw more than normal enquires and order inflows even as the broader markets fell five per cent last week. BSE Star, an MF distribution platform, also recorded its highest-ever single-day order last week. “It is an encouraging sign that small investors are investing instead of redeeming money, even as markets are going in the correction mode,” said an MF official.

Samie Modak