Indian bourses continue to trade flat; Nifty holds 10,800 level

Benchmark indices continued to trade flat with Sensex and Nifty holding 35,600 and 10800 levels, respectively in early noon session on unabated buying by domestic institutional investors and scattered buying by retail investors. As per provisional data DIIs had bought equities worth Rs 576.19 crore on June 14. Some comfort came with a report highlighting that banks have largely written off a record Rs 1,44,093 crore of bad loans in the financial year ending March 2018. The report also noted that public sector banks have written off Rs 1,20,165 crore loans of the amount. Meanwhile, the market regulator is likely to propose removal of the shareholding cap for setting up stock exchanges and other market infrastructure intermediaries such as depositories. But markets were under some pressure with a report stating that India’s trade deficit will continue to increase in 2018-19 despite faster exports growth, as imports are expected to increase at a much higher rate. Furthermore, weakening of the Indian rupee was also dampening sentiments.

On the sectoral front, telecom sector was trading in red with a report stating that the call drop situation deteriorated in April 2018 after two consecutive months - February and March - of good performance by telecom operators. Infrastructure sector was in focus as Transport minister Nitin Gadkari said he will soon meet top bankers to resolve the issue of drying up of funds from banks for construction of highways.

On the global front, Asian counters were trading mostly in red as investors braced for US tariffs against China. However, Japan’s Nikkei share average rose after the European Central Bank announced it would avoid raising rates until mid-2019. Back home, gains in healthcare, IT, TECK and consumer durables helped the markets hold their small gains. Amongst the individual stocks, NTPC, Yes Bank, Power Grid Corporation and ONGC were the top losers on the BSE which were stopping the markets from making huge gains.

The BSE Sensex is currently trading at 35627.02, up by 27.20 points or 0.08% after trading in a range of 35522.63 and 35675.20. There were 11 stocks advancing against 20 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose by 0.16%, while Small cap index up by 0.25%.

The top gaining sectoral indices on the BSE were Healthcare up by 2.00%, IT up by 0.87%, TECK up by 0.65%, Consumer Durables up by 0.41% and Energy up by 0.37%, while Power down by 0.88%, PSU down by 0.84%, Utilities down by 0.76%, Telecom down by 0.71% and Capital Goods down by 0.49% were the top losing indices on BSE.

The top gainers on the Sensex were Dr. Reddys Lab up by 3.93%, Sun Pharma up by 2.14%, Infosys up by 1.36%, Reliance Industries up by 1.20% and Tata Steel up by 0.68%. On the flip side, NTPC down by 1.67%, Yes Bank down by 0.93%, Power Grid Corporation down by 0.90%, ONGC down by 0.89% and SBI down by 0.88% were the top losers.

Meanwhile, Insurance Regulatory and Development Authority of India (IRDAI) is examining suspected illegal practices by some private sector insurers and their partner banks in bancassurance business. Bancassurance is an arrangement between a bank and an insurance company allowing the insurance company to sell its products to the bank's client base.

Some large insurance firms and their parent firms are preserving current account balances with various banks which also act as corporate agents. The interest forgone on such large balance is counted towards the compensation banks are to receive for the sale of insurance products. Due to this practice, the interest of policy holders is at stake as these funds earn zero returns. Such practices are in gross violation of the IRDAI's norms for bancassurance industry and standard corporate governance norms.

The Insurance regulator has highlighted some unlawful practices in the bancassurance channels to the government and has got a go-ahead to act against errant entities. According to IRDAI’s corporate agency regulations, if a bank enters into an agreement with an insurance company for selling insurance products, then that bank is not eligible for any payout other than commission. IRDAI has also noticed that insurance companies and their promoter organisations have engineered rates to pay excess commission or remuneration to their bancassurance partners through ‘seemingly’ legitimate banking transactions.  

The CNX Nifty is currently trading at 10815.00, up by 6.95 points or 0.06% after trading in a range of 10788.90 and 10834.00. There were 21 stocks advancing against 29 stocks declining on the index.

The top gainers on Nifty were Dr. Reddys Lab up by 3.90%, Cipla up by 2.87%, UPL up by 2.65%, Lupin up by 2.63% and Sun Pharma up by 2.24%. On the flip side, HPCL down by 1.92%, NTPC down by 1.80%, Indian Oil Corporation down by 1.75%, Bharti Infratel down by 1.20% and ONGC down by 1.01% were the top losers.

Asian markets were trading mostly in red; Shanghai Composite decreased 19.62 points or 0.64% to 3,024.54, KOSPI Index decreased 15.7 points or 0.65% to 2,407.78 and Hang Seng decreased 1.4 points or 0% to 30,438.77.

On the flip side, Taiwan Weighted increased 73.49 points or 0.67% to 11,087.47 and Nikkei 225 increased 113.14 points or 0.5% to 22,851.75.