Follow the leaders. Invest like they did in June

The Indian mutual fund industry in June saw an erosion of 7.5 per cent in its assets under management (AUM). AUMs reflect the total amount of money that all the mutual fund houses, together, collect from the public.

This indicates that there was very little pressure on the mutual funds in terms of investors selling their units and taking back their money even after markets falling continuously. During the month under consideration (June 2 to June 30) the benchmark BSE 30 Sensex lost 16 per cent or 2,570. The Sensex was trading at 16,063 points on June 2 and crashed to 13,461 points on June 30 the last trading day of the month.

In fact, all the mutual funds put together bought shares worth Rs 3,187 crore in the month of June indicating that they were buying heavily even as the markets were falling. Clearly, an indication that they were finding a lot of value in the Indian stock market.

Interestingly, in a sign that mutual fund investors think long term and are not affected by short-term blips, funds like ABN Amro, DBS Chola and Fidelity -- all managed by expert fund managers -- gained in terms of AUMs by 15 per cent, seven per cent and two per cent respectively. On the other hand we saw the corpus of Tata AIG Mutual Fund falling by a whopping 22 per cent. Barring Tata AIG, most other mutual funds saw a good amount of addition to their AUMs.

If we have to look at stocks specifically then Piramal Healthcare, a pharmaceutical company that is supposed to be a defensive stock in such volatile times, has been the darling of the month. As many as 10 mutual funds bought 44,40,259 shares of the company in the previous month.

The other stocks that found favour with mutual funds are Aban Lloyd Chiles Offshore (bought by six funds), Reliance Infrastructure (bought by five funds), and Spice Communications and Sundaram Clayton [Get Quote] (each bought by four funds apiece).

In terms of highest quantity of stocks bought by AMCs Mukesh Ambani led Reliance Petroleum [Get Quote] has won the race with 62,38,923 shares being picked up by mutual funds. Incidentally, the company is in the news as it has completed 94 per cent of its 100-per-cent-export-oriented refinery at Jamnagar in Gujarat. Once operational, the company will refine 5,80,000 barrels of crude every day.

Interestingly, corporate wars/family feuds apart, Anil Ambani-owned Reliance Mutual Fund was one of the top three funds that lapped up Reliance Petroleum in June. The other two funds were DSP Merrill Lynch and Sundaram BNP Paribas.

The other stocks that found favour were Development Credit Bank [Get Quote], IFCI and Ashok Leyland [Get Quote].

Top 5 stocks bought by AMCs
Company	No of Shares
Reliance Petroleum Ltd	62,38,923
Piramal Healthcare Ltd	44,40,259
Development Credit Bank	26,94,419
Industrial Finance Corporation of India Ltd	26,53,602
Ashok Leyland Ltd	22,25,448

Now, let's have a look at what the mutual funds sold in the month of June.

As many as eight AMCs removed Nicholas Piramal [Get Quote] (not to be confused with Piramal Healthcare; they are two separate companies) from their portfolio. NDTV and Tata Tea [Get Quote] were sold by five AMCs each. Centurion Bank on Punjab was also sold as mutual funds feared that high interest rates and high inflation will affect the company's profits in the next six months.

Top 5 stocks sold by AMCs
Company	No. of AMCs
Nicholas Piramal India Ltd	8
New Delhi Television [Get Quote]	5
Tata Tea Ltd	5
Centurion Bank of Punjab [Get Quote] Limited.	4
Gmr Infrastructure Ltd [Get Quote]	4

The top five stocks sold in terms of quantity were Centurion Bank of Punjab, Nicholas Piramal India, Chambal Fertilisers, Geojit Financial Services [Get Quote] and Carborundum Universal [Get Quote] as shown in the table below.

Top 5 stocks sold (quantity)
Company	No of AMCs
Centurion Bank of Punjab Limited.	2,30,85,456
Nicholas Piramal India Ltd	41,95,535
Chambal Fertilisers & Chemicals Ltd	38,13,818
Geojit Financial Services Ltd.	35,86,586
Carborundum Universal Ltd	34,24,993

Centurion Bank of Punjab was one of the most heavily sold stocks by mutual funds about. About 2.3 crore shares were sold by four AMCs namely Birla Sun Life, Franklin Templeton, ICICI [Get Quote] Pru, and Kotak. And 42 lakh shares of Nicholas Piramal shares were sold by mutual fund houses.

Key points

• Piramal Healthcare is a good buy according to 10 fund houses out of the 31 fund houses in the Indian mutual fund industry
• DSP Merrill Lynch, Reliance Mutual Fund and Sundaram BNP Paribas consider Reliance Petroleum as a good pick

Got a credit card without applying for one?

Niraj Wadhwa* was surprised when he opened the envelope he received one Saturday afternoon. There was a small, flashy credit card tucked inside the envelope. "Not again," Niraj murmured to himself.

He had not asked or applied for it. But the issuing bank decided that he should have one without his permission.

This was the third such credit card Niraj had received after he joined a financial sector BPO in Hyderabad six months back. Interestingly, the card belonged to the bank where he had his salaried account. "They know exactly what my salary and banking habits are and perhaps because of that they gave me a credit limit of Rs 30,000," says the 22 year old.

"I wanted to return it but then had to find time when I could do it," he sighs. Niraj works night shifts and sleeps during the day.

Also, it's not that he is not a credit card fan. Niraj is already using two credit cards -- one belonging to the same bank where he has his salary account -- since the last two years. However, an unsolicited credit card was the last thing he needed in his life.

Cut to Mumbai. Raji Patwardhan*, a mother of two, was shocked when she used an unsolicited credit card at a known grocer's and the transaction did not go through as it was blocked by the issuing bank as a pick up card ie a stolen card. A frantic call to the bank's call centre resolved the matter for her but not before she swore she will never ever use unsolicited credit cards.

Niraj and Raji from two different places in India may not be two random cases who got unsolicited credit cards. For, the banking regulator, the Reserve Bank of India [Get Quote], RBI, has geared up for some action after receiving several complaints on this front.

A circular issued by RBI advising banks on July 23 about unsolicited credit cards states "unsolicited credit cards should not be issued and that in case an unsolicited card is issued and activated without the consent of the recipient and the latter is billed for the same, the card issuing bank shall not only reverse the charges forthwith, but also pay a penalty without demur (raising any objections) to the recipient amounting to twice the value of the charges reversed." Rejoice!

What's more, the person getting an unsolicited credit card could approach the Banking Ombudsman who would decide on the amount of compensation payable by the issuing bank to the one who receives such cards.

You can seek this compensation based on the amount of time you will lose in canceling such cards, money spent in doing the same, and for the mental harassment and anguish it will cause to you.

There's even help if an unsolicited credit card has been misused by somebody else before reaching you.

Citing some instances the RBI has observed that the card issuing bank will be solely responsible for losses arising out of such misuse. The card receiver or the person in whose name such a card has been issued will bear no responsibility. Rejoice again.

But how the banks implement these orders from RBI is another question. "This could perhaps win RBI a host of credit card users but only if such advice is heeded by the issuing banks in letter as well as spirit," says Niraj who's a bit sceptical about how the credit card issuing banks will look at it.

"What happened to the RBI order restricting credit card companies from using high-handed tactics in recovering loans from defaulters?" he demands. "We still get to hear and read about such incidents still happening," he adds showcasing his scepticism.