UTI, the institution that first channelled Indian household savings into the equity markets through mutual funds, unveils its results for the year on Tuesday. "I expect UTI to do very well this last year," said Sanat Dalal, broker at the Bombay Stock Exchange (BSE). "The inflow into its coffers has been more than the outflow and the stock markets' movements have been very favourable to it."

The benchmark BSE 30-share index crossed the 4,200-point mark twice during the year, once in August 1997 and then in April 1998, before dipping to current levels of around 3,100.

"UTI must have taken advantage of the index fluctuating between 3,200-4,200 points by selling at higher levels and purchasing at lower levels," said Dalal. "It also had good opportunities in the debt market, particularly the private placement market," headded.

In 1996-97, UTI held stocks in more than 1,500 companies with total investments worth about Rs 280 billion at book value. "Profit-booking is a continuous process and we have been able to optimise profits because of the diversity of our portfolio," says BG Daga, UTI executive director in charge of domestic equity investments and offshore equity funds. "While the market did get into a bad patch in the latter part of the year, there were good patches when the BSE index went to 3,700-4,000 levels," Daga said.

In 1997-98 (July-June), UTI has mopped up close to Rs 140 billion in fresh subscriptions, AN Palwankar, UTI executive director in charge of sales and marketing, told Reuters.

Of this, nearly Rs 80 billion came from four schemes which drew investors with the promise of assured returns while a large chunk of the balance came from its best-selling Unit Scheme 1964 (US-64), he said.

Funds also accrued from the floatation of new products during the year including a bond fund, a multinationalcompany-oriented sector-specific fund, an index fund and a fund specially for undervalued, lowly-capitalised companies.

UTI has regularly stepped into the markets after they were pounded by foreign funds and local speculators in the aftermath of nuclear tests by India and Pakistan in recent weeks.

The BSE index has lost 21.21 perc ent since the first Indian tests on May 11. Even though UTI has more than 70 schemes in operation, its performance is largely benchmarked by US-64, analysts said. The US-64 scheme rewarded investors with a dividend of 20 per cent in 1996-97 and it is expected to be maintained, if not increased marginally, they said.

"UTI can easily afford to hike dividends, as they have made good profits in the market," said Vijay Pandya, director with local brokerage Classic Share and Stockbrokers.

"Besides if they want to attract more subscriptions both from within the country and overseas, they will have to give returns," he added.