Mumbai, August 11: The Unit Trust of India is proposing to launch yet another offshore equity fund, this time targeted at the public sector unit (PSU) stocks. GP Gupta, chairman, UTI, told The Financial Express that the plan for the launch of this scheme will be finalised over the next fortnight.

The fund is being aimed at investors in the United Kingdom, he said. "We find that foreign institutional investors have been showing tremendous interest in the PSU stocks in India and so it is likely that the scheme will find many takers in other overseas investors as well," he added.

The fund is proposed to be an open-ended one. In the light of the forthcoming disinvestment programme for several PSUs, the number of stocks to invest in will also go up in time. PSU stocks have been doing rather well in the markets, largely because of the support that the FIIs have been extending to them.

The Crisil Public Sector Enterprise (PSE) index, which is a barometer of 20 PSE stocks listed on the BSE, has been moving from a low of 556 on December 4, 1996 to a high of 1,019 on August 5, a whopping jump of 83.27 per cent. The market capitalisation of the PSE index accounts for 86 per cent of the market capitalisation of the listed PSEs.

The Crisil 500 index, in comparison, has moved from 530.42 to 827 over the same period, a jump of 56 per cent. According to Crisil, the upward price movement in the PSE index has been spread across all stocks.

In fact, during the period, several stocks have seen a 100 per cent jump in price, indicating the level of investor interest.

The divestment commission report had suggested that the PSEs be restructured before disinvestment so as to maximise the sale proceeds. Overseas investors are said to be fairly enthused about this step.

Market observers say that UTI seems to launching sector specific equity funds largely because there will be more takers for such funds than a general equity fund.

Recently, UTI had to wind up the Columbus India fund- an offshore general equity fund floated much earlier because the existing investors had pulled out of it and new investors had been unwilling to make an entry.

If finalised, the PSU fund will be the second overseas sector specific fund from UTI. The trust has only recently completed its infotech fund - the India IT Fund - which was 50 per cent oversubscribed. The infotech stocks are also an FII favourite.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.