Shares of HDFC Asset Management Company rose sharply in early trade on Thursday after the Securities and Exchange Board of India (Sebi) declared a reduction in mutual fund expense ratio charges, boosting sentiment across the asset management sector.
HDFC AMC’s stock climbed nearly 5 per cent, tracking gains in peer companies, after the regulator unveiled changes aimed at improving transparency, enhancing compliance and encouraging greater retail investor participation.
Under the revised framework, mutual fund expense ratio limits, now termed the Base Expense Ratio (BER), will exclude all statutory levies. These include goods and services tax (GST), stamp duty, Sebi fees, exchange charges and other statutory costs.
Sebi clarified that the total expense ratio will no longer be calculated as a combination of the BER and regulatory or statutory levies.
The regulator has lowered expense ratio limits across several categories, including index funds, exchange-traded funds (ETFs), fund of funds (FoFs), equity-oriented schemes with more than 65 per cent of assets under management invested in equities, other FoFs, closed-ended schemes and non-equity-oriented schemes.
HDFC AMC shares rose as much as 4.97 per cent to Rs 2,675.60, their highest level since 21 November, before easing slightly to trade 4.26 per cent higher at Rs 2,658.20 by mid-morning. This compared with a 0.30 per cent decline in the benchmark Nifty 50 index.
The stock has gained 26.6 per cent so far this year. Trading volumes were 1.34 times the 30-day average, while the relative strength index stood at 54.78, indicating neutral momentum.
According to Bloomberg data, 19 of the 28 analysts tracking HDFC AMC have a ‘buy’ rating, while nine recommend ‘hold’. The average 12-month price target suggests an upside of around 11 per cent.