Benchmarks trade lower on feeble global cues

Pressurized by feeble global cues, Indian equity benchmarks have made a sluggish start and are trading with a cut of over half a percent in early deals. The US markets suffered sharp cuts led by sell-off in technology stocks and profit booking after big gains of previous session. However, the economic news remained good and initial jobless claims fell to a nearly seven-year low in the week ended April 5th. Most of the Asian equity indices were trading lower at this point of time on reduced demand for riskier assets tailing the fall in US markets, though China’s producer-price index retreated following the previous month’s 2 percent drop.

Back home, sentiments also remained dampened after Reserve Bank of India (RBI) governor Raghuram Rajan said that if the spillover effect of monetary easing in the US was not controlled; emerging markets like India would be forced to build large foreign exchange reserves through aggressive intervention in the foreign exchange markets. He also said that a very accommodative monetary policy could lead to more problems for an economy rather than help sustain growth. IT sector is likely to come under pressure impacted by the selling in global peers.

On the sectoral front, healthcare and consumer durables witnessed the maximum gain in trade, while capital goods, software and metal remained the top losers on the BSE sectoral space. The broader indices, however, were outperforming benchmarks, while the market breadth on the BSE was positive; there were 836 shares on the gaining side against 781 shares on the losing side while 80 shares remain unchanged.

The BSE Sensex opened at 22,642.05; about 73 points lower compared to its previous closing of 22,715.33, and touched a high and a low of 22,642.05 and 22,548.74 respectively. The index is currently trading at 22,590.27, down by 125.06 points or 0.55%. There were 5 stocks advancing against 25 declines on the index.

The overall market breadth has made a strong start with 49.26% stocks advancing against 46.02% declines. The broader indices too were trading in green; the BSE Mid cap index up was by 0.39% and Small cap gained 0.29%. 

The top gaining sectoral indices on the BSE were, Healthcare up by 1.26% and Consumer Durables up by 0.97%, while Capital Goods down by 0.91%, IT down by 0.85%, Metal down by 0.70%, Teck down by 0.57% and Bankex down by 0.50% were the top losers on the sectoral index.

The top gainers on the Sensex were Sun Pharma up by 1.91%, Cipla up by 1.23%, Dr Reddys Lab up by 0.73%, Bharti Airtel up by 0.70% and Tata Motors up by 0.52%. On the flip side, SSLT was down by 1.61%, HDFC was down by 1.47%,  Maruti Suzuki was down by 1.40%, Hindalco was down by 1.37% and Gail India was down by 1.34% were the top losers on the Sensex.

Meanwhile, the Insurance Regulatory and Development Authority (IRDA) is likely to come out with final norms in the next few months for insurance marketing firms, while the domestic insurance firms are taking a cautious approach to distribute products through this channel. Industry players are of the view that sections of the agent/broker community can forcefully push unit-linked products (ULIP) to customers which might lead to trust deficit. Further, insurance firms perceive misuse of customer data as insurance marketing firms dealing with customers for different financial products will have an opportunity to cross-sell products.

The IRDA has introduced a new channel of distribution in order to enhance the penetration level of insurance products in the country. The insurance regulator might allow insurance companies to have multiple tie-ups with insurance marketing firms, which can market and service insurance and sell mutual funds, pension products, and other Sebi-regulated financial products. As per the IRDA, limited liability partnership firms, partnership firms, companies formed under the Companies Act, or any other person recognised by IRDA can apply to be an insurance marketing firm. The IRDA’s move is likely to benefit the corporate who want to enter the Indian insurance industry via a new route.

IRDA has recently held various meetings with the representatives of life and non-life insurance companies and has asked all stakeholders to provide their views on the draft by April 15, 2014. Later, the final norms for insurance marketing firms will be issued and firms will be licensed.

Insurance in India is mainly of two types namely ‘life insurance’ and ‘general insurance’. At present, there are fifty-two insurance companies operating in India of which twenty-four are in the life insurance business. At present, the growth of Indian insurance industry is under pressure owing to the prevailing economic slowdown and change in some traditional product norms. Insurance penetration in India has fallen for the second time after the sector was opened for private players. During 2013, insurance penetration, measured as percentage of insurance premium to gross domestic product, declined to around 3.96% as against 4.1% in 2011 and 5.1% in 2010, reflecting need to develop the insurance sector.

The CNX Nifty opened at 6,758.35; about 38 point higher as compared to its previous closing of 6,796.40, and has touched a high and a low of 6,769.20and 6,743.15 respectively. The index is currently trading at 6,763.20, down by 33.20 points or 0.49%. There were 16 stocks advancing against 34 declines on the index.

The top gainers of the Nifty were NMDC up by 2.10%, Sun Pharma up by 2.05%, Ambuja Cements up by 1.48 %, Cipla up by 1.25% and Cairn up by 1.11%. On the flip side, IndusInd Bank down by 1.80%, SSLT down by 1.79%, HDFC down by 1.62%, L&T down by 1.47% and Jindal Steel down by 1.44% were the top losers on the index.

Most of the Asian equity indices were trading in red; Shanghai Composite declined 12.59 points or 0.59% to 2,121.71, Hang Seng slipped by 153.28 points or 0.66% to 23,033.68, KLSE Composite contracted 10.05 points or 0.54% to 1,849.47, Nikkei 225 tumbled 302.13 points or 2.11% to 13,997.99, Straits Times shed by 6.02 points or 0.19% to 3,197.56, KOSPI Composite dropped by 18.46 points or 0.92% to 1,990.15 and  Taiwan Weighted was down by 88.72 points or 0.99% to 8,859.38.

On the flip side, Jakarta Composite was up by 28.91 points or 0.61% to 4,794.64.