Benchmark continue lackadaisical trade below neutral line

Indian equities continued its lackadaisical trade below neutral line in the late morning session.  While, on the global front, the Asian markets were majorly trading in green with some of the indices are recovering from their four days losing streak on encouraging signs from US, however there was some weak economic reports from within the region and the European crisis too lingered with no solution in sight. The US markets ended mixed, while Dow made some recovery after three straight days of losses, mainly on a report that the Federal Reserve is moving closer toward further stimulus to support the faltering economy. Also there were some better than expected corporate earnings that helped the markets to recover. Traders were seen piling up position in FMCG, and HC sector while selling was witnessed in CG, Realty and Metal sector. Meanwhile, aviation stocks are trading cautious in light of International Air Transport Association (IATA) reports stating the muti-faceted crisis in the beleaguered Aviation sector. IATA director general Tony Tyler warned that in light of critical domestic problems not being addressed, foreign investors might not line up to put their cash in Indian airlines, even if the country allows 49% FDI in Aviation sector. The NSE Nifty and BSE Sensex were trading above their psychological 5100 and 16,800 levels respectively. The market breadth on BSE was negative in the ratio of 655:1290 while 103 scrips remained unchanged.

The BSE Sensex is currently trading at 16826.11 down by 19.94 points or 0.12% after trading as high as 16899.77 and as low as 16800.35. There were 4 stocks advancing against 26 declines on the index.

The broader indices were trading on a negative note; the BSE Mid cap index down 1.14% while Small cap index was down 0.23%.

On the BSE sectoral space, FMCG up by 0.28% and HC up by 0.01% were only the gainers on the index while CG down by 1.01%, Realty down by 0.99%, Metal down by 0.66%, PSU down by 0.52%, and TECk down by 0.44% were the losers on the index.

Sun Pharma up by 1.34%, Bajaj Auto up by 1.30%, Maruti Suzuki up by 1.24%, Jindal Steel up by 1.15% and Cipla up by 0.96% were the gainers on the Sensex, while Tata Motors down by 1.48%, Tata Power down by 1.09%, Sterlite Industries down by 0.95%, Wipro down by 0.93% and Coal India down by 0.88% were the major losers in the index.

Meanwhile, life insurance companies in India planning to raise money from the capital market through initial public offers have got a setback, as the Securities and Exchanges Board of India (Sebi) has turned down an IRDA proposal seeking relaxation of the profitability criterion for insurance companies planning an initial public offering.

A preliminary discussion paper on this matter was placed before the SEBI Committee on Disclosures and Accounting Standards (SCODA) in its meeting held on August 24, 2009. In this regard, SCODA formed a sub-group to review the existing provisions of SEBI (ICDR) Regulations and also to examine whether insurance companies need to make any additional disclosures.

IRDA had represented for relaxation from eligibility requirement (i.e. profitability criteria), stating that insurance companies may find it difficult to comply since gestation period of life insurance business is comparatively longer, and it takes around 6 to 7 years for a life insurer to achieve break even. But SEBI decided that there is no need to provide relaxation from the eligibility criteria since companies which do not comply with the profitability criteria can still raise capital through compulsory book building process as per SEBI (ICDR) Regulations.

Regarding other issues raised by IRDA too, SCODA has made its recommendation, it said that the advertisements made by insurance companies being statutory advertisements, may be as per the provisions of SEBI (ICDR) Regulations only. It also said that placing restriction for issuance of partly-paid shares, through subordinate legislation may not be appropriate and may not also be legally tenable.

Though, Sebi's observations will not have an immediate impact on the insurance industry since no company has made plans for an initial public offering till now, however many of them were waiting for relaxation in norms, mainly the foreign direct investment norms

The S&P CNX Nifty is currently trading at 5,102.70,down by 6.90 points or 0.14% after trading as high as 5,126.30 and as low as 5,093.75. There were 16 stocks advancing against 34 declines on the index.

The top gainers on the Nifty were Ambuja Cement up by 1.78%, Sun Pharma up by 1.43%, Bajaj-Auto up by 1.42%, Maruti by 1.28% and Power Grid up by 1.04%. While, PNB down by 1.67%, Tata Motors down by 1.31%, SAIL down by 1.29%, Sesa Goa down by 1.12% and BPCL down by 1.11% were the major losers on the index.

 Most of  Asian equity indices were trading in green ; Hang Seng index up by 0.25%, Nikkei 225 up 0.86%, Taiwan Weighted up 0.34%, Shanghai Composite up 0.20%, Kospi Composite Index up 0.99% and Straits Times up 1.13% while KLSE Composite down 0.37% and  Jakarta Composite was down by 0.11% there was only the gainers.