Commodities booming; other MFs may also halt silver ETF buys: Nilesh Shah

As gold and silver prices boom, Kotak Mutual Fund has suspended lump-sum and switch-in investments in its Kotak Silver ETF Fund of Fund (FoF).

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Nilesh Shah, managing director of Kotak Mahindra AMC, tells Puneet Wadhwa in a telephonic interview the reasons for the decision and the road ahead for equity and commodity markets. Edited excerpts:

Kotak MF has stopped lump sum and switch-in investments in silver ETF FoF. What's the logic behind this sudden move?

■ The suspension was arrived at based on price dynamics. The ETF price is linked to global silver prices converted into rupees, plus import duty and GST (Goods and Services Tax). Let’s say the global price is $50 per ounce. Converted at ₹90 per dollar, that’s ₹4,500. Add about 7 percent import duty and GST, and the fair price becomes roughly ₹5,000 per ounce.