The bourses started the day on a weak note on negative global cues. Debt issues in the eurozone are likely to persist, but the Sensex may turn around from 16,500
The market staged a smart recovery in the afternoon session to end the day a little lower than the previous closing after a weak start. The BSE Sensex ended at 17,087, down 49 points (0.3%) and the Nifty ended at 5,125, down 23 points (0.4%). The bourses started the day with a deep plunge taking cues from the weak global markets on concerns over the Greece debt crisis. Trading was range-bound till the afternoon session, however, it recovered major losses posted earlier by rebounding strongly.
Asian stocks were down on worries of sovereign debt issues in Europe. Key benchmark indices in Hong Kong, Indonesia, Taiwan, and Singapore were down by 0.14% and 4%. China's Shanghai Composite index rebounded positive, led by aviation stocks. The index rose 0.77%. Markets in South Korea and Japan were closed for holidays. US markets declined sharply on Tuesday (4th May), on concerns that Europe’s attempt to contain Greece's debt crisis would fail. The Dow was down 225 points, (2%), to 10,926. The S&P 500 shed 28 points, (2%), to 1,173 and the Nasdaq was down 74 points, (3%), to 2,424.
The International Monetary Fund (IMF) expressed its concern over the spreading of the Greece debt crisis to Euro nations. A massive Greek bailout package announced on Sunday failed to halt the increasing unrest about sovereign-debt problems along the
eurozone’s boundary. However, the concern over the amount of aid and the possibility of a spread of the crisis raised jitters among investors, triggering an intense sell-off. The European Central Bank (ECB) will hold a regular policy meeting on interest rates on Thursday. Interest rates in the eurozone have now been on hold at 1% for a year and there is expectation that the rates will be left unchanged till next year.
Closer home, the government is likely to ease controls on the sugar sector as the outlook for the domestic crop improves, softening sugar prices. An impetus from the Commission for Agricultural Cost and Prices (CACP) has directed the government towards this. India's sugar output in 2010-11 is expected to increase to 23-24 million tonnes (MT) from an estimated 18.5 MT in the current year to September.
Foreign institutional investors were net sellers on Tuesday selling stocks worth Rs29 crore. Domestic sellers also sold stocks worth Rs438 crore. The rupee was strong on dollar selling by exporters and the recovery in the equity market also helped the gain.
Adani Enterprises (up 1.3%) plans to raise up to Rs4,000 crore through the issue of securities in global or domestic markets. The company's board of directors gave its approval to create, offer, issue and allot securities in either one or more international or domestic offerings through the issue of Global or American Depository Receipts (ADRs) and debentures or Foreign Currency Convertible Bonds (FCCBs). The route for raising amount may be public issue, rights issue, preferential issue, private placement or qualified institutional placement or any combination thereof. Ashok Leyland’s (up 2.9%) total vehicle sales grew 271.4% to 6,500 units in April 2010 over the year-ago period. Domestic sales increased 271% to 5,990 units, while exports grew 278% to 510 units in April 2010 over the year-ago period. Eicher Motors’ (up 3%) domestic sales grew 107.20% to 2,903 units in April 2010 over April 2009. The company's exports fell 2.74% to 142 units in the same period. ARSS Infrastructures Projects (up 4.7%) has received a new work order from Madhya Pradesh Road Development Corporation Ltd on 4 May 2010 for Rs99.90 crore.
BL Kashyap and Sons Limited (down 1%) has received new projects worth Rs516 crore in the segments of residential hospitality and industrial construction.
A report has revealed that domestic brokerages have become more service-oriented and have improved their technological capabilities
Domestic brokerages, such as Motilal Oswal and ICICI Securities, are likely to strengthen their hold over the institutional market to catch up with their foreign counterparts, as their market share is expected to rise to over 50% by 2015, reports PTI.
According to a report by global research firm Celent, domestic brokerages' importance is steadily increasing in the Indian institutional market, where foreign brokerages like CLSA, Merrill Lynch, Morgan Stanley and JP Morgan have been the leading players traditionally.
"Now the Indian brokerages such as Edelweiss, Kotak Securities, ICICI Securities, and Motilal Oswal are also becoming important players in the market. Hence, we anticipate the share of the domestic brokerages rising to more than 50% in the institutional space by 2015," the report stated.
"This will be coupled with the growth of the domestic clients of some of these brokerages and their increasing acceptance with foreign institutional investors," it added.
The report revealed that domestic brokerages have become more service-oriented and have improved their technological capabilities.
Moreover, they are also improving the breadth of their product offerings and becoming more complete financial supermarkets in the process.
"Domestic brokerages are no longer content to play second fiddle in the market and are more comfortable using the latest technology and engaging foreign vendors," Celent’s senior analyst and author of the report Anshuman Jaswal said.
Unlike its retail counterpart, the Indian institutional brokerages market is relatively concentrated, with nine to 10 foreign brokerages and seven to eight domestic players having a combined market share of 60-70%.
The Celent report also stated that electronic trading in the industry has been steadily increasing.
"We expect that electronic trading will go from only 10% in 2009 to 50% in 2015, as the domestic institutions become more adept at it," it stated.
The insurance industry is reeling under losses, especially in the health insurance sector. Premiums have gone up—even covers are bound to shrink now as insurers try to shore up margins
The health insurance industry has been suffering as corporate healthcare is becoming an expensive business for insurers, with claims shooting up. Ergo, consumers will soon bear the brunt of higher premiums and stricter cover norms, while applying for a health insurance cover.
“The claims ratio in the health insurance sector has increased and this has made many insurance companies to jack up their premiums. Many companies are planning to reduce the add-ons they were planning to provide to their covers, for their upcoming products,” an official from a major insurance company said.
He added that the rising premiums and reduced covers are only meant to restrict some of the privileges policyholders received, so as to bring down losses and control the flow of cash.
The official added that these new products with increased premium and reduced covers will be introduced—somewhere between August and September—after approval from regulator Insurance Regulatory and Development Authority (IRDA).
Under the fresh (proposed) hospitalisation norms, stricter caps for hospital room rents are also on the cards. Also, the age limit for medical tests, which are conducted after the age of 40, would now be reduced to 35 years, the official said.
These changes in premiums and covers could be a considerable disadvantage for those who wish to buy a new health cover for themselves. However, the official said that these changes will only be seen in the new products that are proposed to be introduced.
“These moves, which are being planned, are clearly to reduce expenditure for insurers,” said the official.
According to Yogin Sabnis, a certified financial planner for VSK Financial Consultancy Services Pvt Ltd, policyholders would now have to insure themselves early.
As Moneylife has reported earlier (http://www.moneylife.in/article/8/5146.html), insurers are trying to cut out third-party administrators from the chain to improve customer service and cut costs.
Health insurance has turned out to be the fastest-growing segment in the business. However, the dramatic rise in health insurance premiums in the last few years has thrown households off-balance, and has also impacted companies severely. In most cases, the claims ratio in the corporate group health insurance segment is over 100%.