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`Futures, options to drive stock market'

Our Bureau

BANGALORE, July 1

THE `death' of badla system may augur well with the market getting to access more liquidity thus giving a push to long-term investment prospects. However, the futures and options will be part of the stock market dynamics in the long run.

With some structural changes and transparency, futures and options was likely to drive the stock market, said Mr Alok Vajpeyi, Chief Operating Officer, DSP Merrill Lynch.

Talking to a group of newspersons, Mr Vajpeyi felt that mutual funds had a definite role to channelise the aspirations of long-term investors and should, with education and guidance coupled with technology to fine-tune the investor services, bring greate r focus on investment in mutual funds.

The volatility of equity market will be only a short-term phenomenon but with the improvement of the economy in about three to six months, triggering demand for funds should come as an encouraging prospect to asset management companies. Though he did not see interest rates going up as a consequence of demand for money, he felt there would be pressure on interest rates, indirectly enlarging scope for investors to turn to mutual funds.

Mr Vajpeyi, who was here to firm up the launch of a branch office, said that Merrill Lynch was bullish on the southern region, which is emerging as a major business area. However, it was Bangalore with its large corporates which was promising to be more vibrant, with 50 per cent of the 10 per cent mobilisation by mutual fund companies coming from this IT capital of the country.