Market enlarges gain supported by spurt in banking and auto stocks

Indian benchmarks have enlarged their gains, trading strength to strength since morning. Apart from the initial cautiousness the benchmarks never showed any sign of faltering at any point of trade. Though, the global cues are not very supportive but the major indices seem to have been inspired by the huge surge in the Japanese counterpart. Finance Minister P. Chidambaram’s attempt to boost growth by lowering duties on consumer durables has been welcomed by the industry body and the traders have given thumbs-up to the interim budget proposals. FM's assurance that the country’s fiscal deficit would be contained at 4.6% of gross domestic product (GDP) in 2013-14, beating his own target of 4.8%, is what most cheering the markets today. Sectorally, while the banking, capital goods and power have taken the lead, the defensive FMCG sector is still to gain pace. In scrip specific movement, the telecom major Bharti Airtel was under pressure since morning despite entering into a strategic agreement to acquire business and assets of Loop Mobile for about Rs 700 crores, the scrip was trading lower by about half a percent.

The BSE Sensex is currently trading at 20660.56, up by 196.50 points or 0.96% after trading in a range of 20676.94 and 20436.48. There were 22 stocks advancing against 8 stocks declining ones on the index.

The broader indices were trading neck in neck to the benchmarks; the BSE Mid cap index was up by 0.73%, while Small cap index added 0.71%.

The top gaining sectoral indices on the BSE were, Bankex up by 2.18%, Auto up by 1.34%, Capital Goods up by 1.33%, Power up by 1.25% and Metal was up by 1.21%. While, FMCG marginally down by 0.25 points was the lone losing index on BSE.   

The top gainers on the Sensex were Maruti Suzuki up by 3.57%, Axis Bank up by 3.15%, HDFC up by 3.04%, ICICI Bank up by 2.73% and SBI was up by 2.08%. On the flip side, Tata Power down by 0.71%, Gail India down by 0.57%, Bharti Airtel down by 0.56%, Coal India down by 0.55% and ITC down by 0.41% were the top losers.

Meanwhile, in view of the tepid response by banks to act as brokers for selling products of multiple insurers, Insurance regulator, Insurance Regulatory and Development Authority (IRDA), would be renewing the corporate agency licence of banks, which would enable them to continue to exclusively sell products of one insurance company.

Last year, IRDA had released final guidelines on bancassurance which allowed banks to sell insurance products of many companies. However, the new model failed to gain the required response as many banks have floated their own insurance subsidiaries or have tied up with one insurer or other exclusively.

At present, banks have a corporate agency arrangement with insurance companies to sell insurance products. Under this arrangement, banks are allowed to sell products exclusively of one life insurer, one non-life insurer and a standalone health insurer.

Nevertheless, the regulator still believes bank’s insurance broking model would gain momentum going further and is currently working with the Reserve Bank of India to craft guidelines on which could be in the best interest of bother stakeholders and policyholders.

Further, IRDA also emphasized upon the need for correct pricing of insurance products, and the role that actuaries play in determining prices. The regulator also raised concern on the persistence levels of life insurance industry, underscoring that product design was very crucial for high persistence and also stressed on lowering expense ratio.

The CNX Nifty is currently trading at 6,133.30, up by 60 points or 0.99% after trading in a range of 6,138.65 and 6,066.80. There were 39 stocks advancing against 11 declining ones on the index.

The top gainers of the Nifty were Jindal Steel up by 6.37%, Maruti Suzuki up by 3.51%, Axis Bank up by 3.26%, HDFC up by 3.20% and ICICI Bank was up by 2.88%. On the flip side, HCL Tech down by 0.91%, Tata Power down by 0.90%, GAIL down by 0.76%, ITC down by 0.55% and Coal India down by 0.51% were the major losers on the index.

Most of the Asian equity indices ended in green; Hang Seng was up by 0.23%, Nikkei 225 surged by 3.13%, Straits Times was up by 0.04%. Seoul Composite gained 0.03% and Taiwan Weighted was up by 0.43%.On the other hand Shanghai Composite declined by 0.77%, KLSE Composite was lower by 0.22%, while Jakarta Composite ended flat.

The European markets have given up their early gains; France’s CAC 40 was down by 0.17%, Germany’s DAX was down by 0.02% and UK’s FTSE 100 was lower by 0.11%.