Benchmarks trim gains; Nifty holds 6050 mark

Indian equities trimmed gains but continue to trade in green in the late afternoon session. The sentiments remained optimistic from the early trade, taking cues from global counterparts. Foreign institutional investors, who were net sellers in the cash market since the beginning of this expiry, yesterday snapped their five-day selling streak, too added some optimism on the street. Investors however took cautious approach on expectation of weak advance growth figures, which would be unveiled later in the evening. The government is likely to cut its estimate of 5 percent growth forecast for the fiscal year that ends on March 31, thanks to a slower-than-expected recovery by industries. Traders were seen piling positions in Metal, HealthCare and Realty stocks, while selling was witnessed in FMCG, IT and TECK sector. In scrip specific development, Aurobindo Pharma was trading firm after touching its 52-week high on reporting a growth of 354 percent in its net profit figure to Rs 417 crore during December 2013 quarter, up from Rs 92 crore the same quarter a year ago thanks to better mix products with high margins.

On the global front, the Asian markets were trading in green, while the European markets were trading on mixed note. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 6,050 and 20,200 levels respectively. The market breadth on BSE was positive in the ratio of 1341:1033 while 141 scrips remained unchanged.

The BSE Sensex is currently trading at 20364.11, up by 53.37 points or 0.26% after trading in a range of 20,450.51 and 20,289.30. There were 20 stocks advancing against 10 stocks declining on the index.

The broader indices continue to outperform larger indices; the BSE Mid cap index was up by 0.57%, while Small cap index was up by 0.52%.

The gaining sectoral indices on the BSE were Metal up by 2.31%, HealthCare up by 1.56%, Realty up by 1.41%, Power up by 0.77% and Auto up 0.70%. While, FMCG down by 0.47%, IT down by 0.32%, TECK down by 0.28% and Consumer Durables down by 0.04% were the only losing indices on BSE.   

The top gainers on the Sensex were Tata Steel up by 5.60%, SSLT up by 2.95%, Sun Pharma up by 2.92%, Bajaj Auto up by 2.02% and Maruti Suzuki up by 1.68%.

On the flip side, Wipro down by 1.24%, TCS down by 1.21%, Hindustan Unilever down by 0.88%, Gail Indian down by 0.76% and ITC down by 0.69%.

Meanwhile, in order to resolve the concerns of PSU banks for acting as an insurance broker, government’s panel is considering the proposal to define the exact road map to implement the multi-company insurance sale model. The government also indicated that PSU banks must follow broker model to sell insurance instead of corporate agency model. Government wants to use banking network to deepen insurance coverage in the country. Therefore, Finance Ministry, in December, has directed public sector banks to become insurance brokers instead of remaining corporate agents.

Conversely, 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 insurance broking model is also backed by the Insurance Regulatory and Development Authority (IRDA), which noted that it is open to further relax norms to facilitate this transition. The insurance regulator has cleared that its guidelines regarding bancassurance will be the same for both state and private sector banks for selling insurance products. As per the IRDA guidelines, banks will have to cap business from their own group companies at 25% for both life and non-life business. Furthermore, according to the RBI guidelines, banks with more than 3% of non-performing loans and lower than 10% capital adequacy ratio cannot undertake insurance broking business, 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.

The CNX Nifty is currently trading at 6,056.55, up by 20.25 points or 0.34% after trading in a range of 6,079.95 and 6,035.95. There were only 35 stocks advancing against 15 declining on the index.

The top gainers of the Nifty were JP Associates up by 6.74%, Tata Steel up by 5.63%, Ambuja Cement up by 3.88%, Bank of Baroda up by 3.62% and Sun Pharma up by 3.09%.

On the flip side, TCS down by 1.37%, Wipro down by 1.14%, Ranbaxy down by 0.98%, HUL down by 0.94% and BHEL down by 0.83% were the major losers on the index.

The Asian equity indices were trading in green; Seoul Composite up by 0.77%, Nikkei 225 up by 2.17%, Straits Times up by 0.79%, KLSE Composite up by 0.59%, Jakarta Composite up by 0.99%, Hang Seng up by 1.00%, Taiwan Weighted up by 0.92% and Shanghai Composite up by 0.56%.

The European markets were trading on a mixed note; France’s CAC 40 was down 0.05%, Germany’s DAX added 0.09% and UK’s FTSE 100 gained 0.08%.