Markets trade higher in early deals on F&O expiry session

Indian equity benchmarks have made a positive start on F&O expiry session, with frontline gauges trading higher, with a gain of around quarter of a percentage point. Sentiments remained up-beat after Mauritius said that it has put additional safeguards in place for global business companies operating from its jurisdiction to ensure their substantial presence there and to boost its image as a preferred global financial centre. Some support also came in from report that revenues from service tax, the new focus area for the finance ministry, have grown over 300 times in the past two decades, besides, the number of assessees have gone up over 400 times since 1994-95.

Global cues too remained supportive as the US markets ended mostly higher ahead of Christmas holiday, reacting to a pair of better than expected economic reports, though the trade remained somewhat subdued. Moreover, most of the Asian markets were trading in the green at this point of time, with investors picking up stocks amid renewed optimism about the global economy on the back of recent encouraging data from the US, Europe and parts of Asia.

Back home, on the sectoral front, consumer durables witnessed the maximum gain in trade followed by auto and capital goods, while software remained the lone loser on the BSE sectoral space. The broader indices, however, outperforming benchmarks and are trading with a gain of around a percent, while the market breadth on the BSE was positive; there were 976 shares on the gaining side against 255 shares on the losing side while 51 shares remain unchanged.

The BSE Sensex opened at 21051.00; about 18 points higher compared to its previous closing of 21032.71, and touched a high and a low of 21088.55 and 21051.00 respectively.

The index is currently trading at 21076.20, up by 43.49 points or 0.21%. There were 21 stocks advancing against 9 declines on the index.

The overall market breadth has made a strong start with 76.73% stocks advancing against 19.42% declines. The broader indices too were trading in green; the BSE Mid cap index up was by 0.86% and Small cap gained 1.01%. 

The top gaining sectoral indices on the BSE were, Consumer Durables up by 1.30%, PSU up by 0.76%, Auto up by 0.71%, Capital Goods up by 0.65% and Power up by 0.61%, while IT down by 0.03% were the top losers on the sectoral index.

The top gainers on the Sensex were SSLT up by 1.36%, ONGC up by 1.33%, Gail India up by 1.26%, Bharti Airtel up by 1.11% and BHEL up by 1.04%. On the flip side, HDFC was down by 0.54%, Wipro was down by 0.51%, Hero MotoCorp was down by 0.39%, TCS was down by 0.20% and ITC was down by 0.19% were the top losers on the Sensex.

Meanwhile, In order to increase the insurance distribution network and to avoid mis-selling of insurance products in the country, Finance Ministry has directed public sector banks to act as insurance brokers by floating a subsidiary from January 15. 

Meanwhile, as per the RBI guidelines, banks with large bad loans, low capital and losses may not qualify to start insurance broking firms. The RBI has noted that banks with more than 3% of non-performing loans cannot get into selling multiple products, eliminating PSU banks such as Central Bank of India, Allahabad Bank and United Bank of India. Currently, banks are allowed to sell products of one life, one nonlife and one health insurance company. Furthermore, earlier in August, the insurance regulator had also released the final guidelines on bancassurance under which banks must not have more than a 50% exposure to any one client. It may also not be acceptable for foreign joint venture partners of life insurance companies such as PNB Metlife Insurance and SBI-IAG General Insurance, which have paid hefty premium for exclusive bank distribution network.

On the other hand, banks are not keen to acts as an insurance broker as the banking industry is of the view that under this model, banks are likely to see a substantial decrease in their premium collections. As corporate agents, banks can earn up to 35 percent of the first-year premium but as brokers they would be entitled to a maximum of 30 percent. Further, banks also fear that floating a subsidiary to sell insurance products and ending the exclusive arrangements with insurance companies will be difficult.

The CNX Nifty opened at 6,270.10; about 2 points higher as compared to its previous closing of 6,268.40, and has touched a high and a low of 6,285.00 and 6,270.05 respectively. The index is currently trading at 6,283.60, up by 15.20 points or 0.24%. There were 36 stocks advancing against 14 declines on the index.

The top gainers of the Nifty were BPCL up by 2.28%, PNB up by 1.50%, SSLT up by 1.41%, Ambuja Cements up by 1.38% and JP Associate up by 1.29%. On the flip side, Power Grid down by 0.91%, NMDC down by 0.54%, Wipro down by 0.48%, HDFC down by 0.44% and Kotak Bank down by 0.32% were the top losers on the index.

Most of the Asian equity indices were trading in green; KLSE Composite rose 4.32 points or 0.24% to 1,839.81, Nikkei 225 strengthened 126.00 points or 0.79% to 16,135.99, Straits Times increased 8.08 points or 0.26% to 3,135.37, Seoul Composite added 2.86 points or 0.14% to 2,004.45 and Taiwan Weighted was up by 12.39 points or 0.15% to 8,480.15.

On the flip side, Shanghai Composite was down by 23.83 points or 1.13% to 2,082.53.

Hong Kong and Indonesian markets remained shut for the trade today for Christmas Holidays.