Sher Singh, banking and consumer analyst for Consult Opportune (India's first specialised consumer banking consultancy service), says that people are not expected to go all out for the MF schemes despite the tax concessions. Therefore, there is no question of bank fixed deposits and bonds issued by various financial institutions suffering.

Says Singh: ``While, temporarily or in the short run, these capital market sops for both UTI and MFs will no doubt lead to a surge in investments in these instruments, yet I aver that there will not be a marked change in the direction of investments by the retail investor, so as to make them invest predominantly in MFs and UTI schemes, and may not mark the return of the investor to equity funds in hordes.''

But whatabout US-64? Will it make a comeback, in terms of investor confidence? Replies Singh: ``US-64 as a scheme for retail investors may not rise in significant eminence.'' He elaborates on why US-64 may not make it big again: Unless the government addresses effectively and adequately the fundamentals of the economy, there will not be a major spurt in demand.``So what is needed is an attempt to kick-start the economy and industrial activity, by increasing the capital expenditure significantly and looking at other pressing concerns relating to the overall development of the economy.'' Singh adds that political uncertainty has also given rise to a `crisis of confidence'-both consumer and investor confidence.

``Thus, no amount of sops or bail-out packages, however expertly conceived, can lead to sustained buoyancy in the capital markets and concomitantly lead to a marked change in investment trends in favour of the stock markets,'' according to Singh. Does that mean that the MF proposals will fail to have an impacton bank FDs and bonds? States Singh: ``Bank fixed deposits, and ICICI and IDBI bonds will not suffer, as the investor's top priority in these times is safety of capital with adequate returns to compensate for inflation.''

While agreeing that small investors will be cautious about investing in equity-linked funds as they have burnt their fingers once, Prof. J D Agarwal, director, Indian Institute of Finance, says that there will be a definite shift to MFs from bank FDs, etc.

Agarwal explains the phenomenon. He says that two things have happened together. First, the budget proposals announced that the income earned from MFs and schemes such as US-64 will not be taxed at the hands of the investors, thereby making it an attractive investment proposition.

The second thing is equally important. Says Agarwal: ``Immediately after the budget proposals, the Reserve Bank of India (RBI) cut the bank rate by 1 per cent. As a result, the money put in bank fixed deposits won't yield as high a return as before.''

So,on one hand, the investors are being lured towards MFs and other equity-linked schemes, and on the other hand, they are being discouraged from investing in bank FDs, explains Agarwal. But as small investors will not like to see an erosion in capital investment, stability in the stock market is important to revive the investor's confidence, he adds.

The market view is somewhat similar to Agarwal's view. Says Pawan Parkash Gupta, general secretary, Association of UTI and NSC Agents: ``The new proposals on MFs will certainly boost the market.'' And investors will shift from bank FDs and bonds to MFs now, Gupta feels. And the shift will not be short-term, he adds.

Among the MF schemes, will close-ended schemes be more popular, or open-ended ones? Singh of Consult Opportune says: ``For those investing in MF schemes, open-ended schemes will remain more popular than close-ended schemes.'' With open-ended funds, one is confident about liquidity, he adds. Also, one knows that in uncertain times, you can switch andreshuffle your retail investor portfolio, Singh explains.

Finally, Singh lists out the future trends in investment in the light of the Budget 1999 proposals. And he maintains that bank fixed deposits still top the list, with small savings a close second. Then come gold and real estate, debentures/bonds, MFs (open-ended, then close-ended), equity shares and company FDs, in that order.