Post Session: Quick Review

After witnessing a sharp set-back of around 1.25% in previous trading session, Indian equity markets extended their southbound journey on Thursday and ended with a cut of around two tenth of a percent, which dragged both Sensex and Nifty below their psychologically crucial 25,250 and 7,550 levels respectively. Some recovery witnessed in the late hours after select market-participants scrambled to cover their short positions, minimized losses on the bourses. Nevertheless, prevailing concerns over Iraq turmoil continued to weigh on risk appetite of investors, leading to second successive down-session of trade.

The fall of markets was led by stocks from Oil & Gas counters, which collapsed after reports suggested of government was contemplating to allow higher gas price as per the Rangarajan formula, only for incremental production over and above the current levels, as an alternative to applying the formula unconditionally from July 1. Nevertheless, some buying in Information Technology, Technology counters on the back of rupee’s depreciation provided a floor to market’s fall. In the choppy session of trade, broader indices too succumbed to selling pressure and snapped the session with loss of over three tenth of a percent.

On the global front, most of the Asia pacific shares shunned early optimism seen on fed’s positive assessment of the US economy, which led to rally at Wall Street overnight, to end mixed on Thursday. On the flip side, European stocks rose after the Federal Reserve repeated its pledge to leave interest rates near their record low and said the world’s largest economy should experience sustained growth. The Fed’s accommodative policy stance is seen as one of the positives, as rising consumption in the US is expected to help underpin some of Asia’s big export-driven economies. Meanwhile, brent crude held near a nine-month high above $114 a barrel on Thursday supported by concerns about potential supply disruptions due to fighting in Iraq.

Closer home, markets after getting a weak start, went on losing ground contrary to global peers which were trading sanguine on Fed’s positive assessment, while benchmarks nose-dived to day’s low in afternoon deals with the start of European market, they recovered some of the lost ground by the close of trade. On the BSE sectoral front, stocks from Information Technology, Consumer Durable and Technology counters were the prominent gainers of the session, while those from Oil & Gas, Public Sector Undertaking and Infrastructure index were the worst hit of the session. Many PSU stocks plunged in trade today after The Securities and Exchange Board of India (SEBI) on Thursday asked the government to cut its stake in listed state companies and cap it at 75% within three years. In non-sectoral gauge activity, shares of companies whose fortunes are linked to orders from Indian Railways rose on reports the government is moving swiftly to allow foreign direct investment in railways. The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 1405:1588, while 89 scrips remained unchanged. (Provisional)

The BSE Sensex lost 55.62 points or 0.22% to settle at 25190.63. The index touched a high and a low of 25425.85 and 25069.66 respectively. Among the 30-share Sensex, 14 stocks gained, while 16 stocks declined. (Provisional)

The broader indices too traded ended the session in the red; the BSE Mid cap index was down by 0.49% and Small cap index was down by 0.38%. (Provisional)

On the BSE Sectoral front, IT up by 1.76%, TECk up by 1.21%, Consumer Durables up by 1.19%, Healthcare up by 0.55% and FMCG up by 0.15% were the top gainers while, Oil and Gas down by 3.20%, PSU down by 2.21%, Infrastructure down by 1.30%, Metal down by 1.01% and Power down by 0.98%, were the top losers in the space. (Provisional)

The gainers on the Sensex were TCS up 2.37%, Infosys up by 1.77%, M&M up by 1.60%, Wipro up by 1.21% and Tata Motors up by 1.19%. On the flip side, the key losers were ONGC down by 5.09%, Maruti Suzuki down by 3.01%, RIL down by 2.51%, Coal India down by 2.14% and GAIL down by 1.87%. (Provisional)

Meanwhile, to protect the long-term interests of life insurance policyholders, the Insurance Regulatory and Development Authority (IRDA) has made it mandatory for agents to provide full details in a transparent manner before persuading policyholders to shift to another life insurance firm. The draft underscores that no life insurance agent, insurance intermediary or an insurer is permitted to replace a life insurance policy, except, if it is in the interest of the policyholder.

The guidelines floated by the insurance regulator, which tightens replacement norms that would help retain the existing life insurance policy, envisages full disclosure and transparent information to the policyholder to avoid a possible misrepresentation as to the factual position of financial consequences of replacing an existing life insurance policy.

These guidelines, charted out by the insurance watchdog, seeks to discourage intermediaries from persuading lapsing, surrendering or making paid-up of an existing life insurance policy with the intent of canvassing or soliciting a new life insurance policy on the same life. It is framed with an aim to encourage fair market conduct and fair business practices amongst life insurers and insurance intermediaries.

According to the regulator, replacement, if required, would be subject to certain conditions, including obtaining a written consent from the prospect for replacing existing policies. Besides this, there also will be requirement to obtain the particulars of all existing life insurance contracts of the prospect and details of those policies that are proposed to be replaced. Additionally, other condition would include submission of the proposal form to the insurer (new insurer) replacing the existing life policy contracts after the expiry of 15 days from the date of notifying the insurer (old insurer) whose policies are proposed to be replaced, among other things.

India VIX, a gauge for markets short term expectation surged 0.87% at 18.74 from its previous close of 18.58 on Wednesday. (Provisional)

The CNX Nifty declined 17.50 points or 0.23% to settle at 7,540.70. The index touched high and low of 7,606.45 and 7,502.55 respectively. Out of 50 stocks in Nifty, 22 stocks ended in the green and 28 in red. (Provisional)

The major gainers of the Nifty were Indusind Bank up 2.60%, TCS up by 2.38%, Infosys up by 2.05%, Asian Paints up by 1.83% and Sun Pharma up by 1.44%. On the flip side, the key losers were McDowell down by 7.93%, BPCL down by 4.98%, ONGC down by 4.79%, Kotak bank down by 3.97% and Maruti Suzuki down by 2.62%. (Provisional)

European markets were trading in green; UK’s FTSE 100 up by 0.80%, Germany’s DAX up by 0.82% and France’s CAC 40 was up by 0.87%.

The Asian markets concluded Thursday’s trade mixed, after the Federal Reserve stated that interest rates will remain low for some time as US growth rebounds, and Premier Li Keqiang pledged to meet China’s target for economic expansion. The minutes from the Bank of Japan’s May board meeting released showed that Japanese exports face headwinds with the political crisis in Thailand, a key supply chain hub, hurting business and acting as an economic drag. Japan’s All Industries Activity Index fell to a seasonally adjusted -4.3%, from 1.5% in the preceding month. The BoJ decided by a unanimous vote to leave the policy target unchanged as expected.

Japan’s exports in May suffered their first annual decline in 15 months as external demand remained soft despite a recovery in advance economies, suggesting a bumpy ride for the world’s third-largest economy. Exports fell 2.7% in the year to May, compared with a 1.2% drop seen by economists and a 5.1% rise in April. On a seasonally adjusted basis, exports fell 1.2% percent in May from the prior month