Downtrend has been arrested for now. But for the upmove to be strong, Nifty should close decisively above 5,685
Gains in consumer durables, in view of the festive season, and robust sales for October boosted the auto sector today, helping the market recover in the second half of trade. Yesterday we had mentioned that the Nifty’s downtrend may be mitigated on a close above 5,645. Today the index closed at the same level. We may now see a small rally. But the small upmove would be confirmed if the index closes above 5,685. The National Stock Exchange (NSE) saw a volume of 57.38 crore shares with an advance decline of 907:519.
The Indian market opened marginally lower on weak global cues and pressure on the Reliance Industries stock after India Against Corruption (IAC) activist Arvind Kejriwal yesterday alleged that the Congress and BJP had granted undue favours to the company. On the global front, markets in Asia were mostly in the red in morning trade despite an uptick in China’s manufacturing output in October. Overnight, the US markets settled flat in thin trading following the two-day weather-related market shutdown.
The Nifty opened 10 points down at 5,610 and the Sensex started the day at 18,488, a cut of 17 points over its previous close. The benchmarks hovered on both sides of their previous close till late morning trade. In the interim, the market fell to its lows at around 10.30 am with the Nifty going back to 5,602 and the Sensex retracting to 18,445.
Buying in heavyweights enabled the indices emerge into the green in pre-noon trade. Gains in consumer durables, auto, realty and healthcare sectors pushed the indices to their highs just after 2.30pm. At the highs the Nifty touched 5,650 and the Sensex rose to 18,589.
The benchmarks pared a small part of their gains and settled in the positive for the second day in a row. The Nifty gained 25 points to 5,645 and the Sensex added 56 points to finish the session at 18,562.
The broader indices outperformed the Sensex today, as the BSE Mid-cap index climbed 0.58% and the BSE Small-cap index rose 0.75%.
Except for two sectoral indices, all other sectoral indices ended in the positive. The main gainers were BSE Consumer durables (up 5.57%); BSE Auto (up 2.20%); BSE Realty (up 1.79%); BSE Power (up 1.02%) and BSE Healthcare (up 0.88%). The losers were BSE FMCG (down 0.86%) and BSE Oil & Gas (down 0.28%)
21 of the 30 stocks on the Sensex closed in the positive. The chief gainers were Tata Motors (up 4.89%); Bharti Airtel (up 4.41%); Cipla (up 3.12%); Wipro (up 3.02%) and Bajaj Auto (up 1.71%). The main losers were Hindustan Unilever (down 1.84%); ONGC (down 1.34%); ITC (down 1.26%); GAIL (down 0.90%); HDFC Bank (down 0.89%)
The top two A Group gainers on the BSE were—Titan Industries (up 9.83%) and Aurobindo Pharma (up 7.36%)
The top two A Group losers on the BSE were—Coromandel International (down 2.21%) and Hindustan Unilever (down 1.84%)
The top two B Group gainers on the BSE were—Birla Ericsson (up 19.98%) and Shekhawati Poly-Yarn (up 19.88%)
The top two B Group losers on the BSE were—Aunde India (down 11.11%) and Saksoft (down 10.21%).
Out of the 50 stocks listed on the Nifty, 38 stocks settled in the positive. The key gainers were Tata Motors (up 4.44%); Bharti Airtel (up 4.34%); Cipla (up 3.45%); IDFC (up 2.80%) and Wipro (up 2.74%). Among the losers were HUL (down 1.82%); ONGC (down 1.42%); ITC (down 1.27%); HDFC Bank (down 0.96%) and GAIL India (down 0.92%).
Markets in Asia recovered from early losses and settled higher on signs of recovery in the region on the back of a growth in China’s manufacturing sector. China's official PMI rose to 50.2 in October from 49.8 in September, , pointing to expanded factory activity in the world's second-largest economy.
The Shanghai Composite surged 1.72%; the Hang Seng climbed 0.83%; the KLSE Composite gained 0.16%; the Nikkei 225 advanced 0.21% and the Taiwan Weighted rose 0.19%. On the other hand, the Jakarta Composite fell 0.34%; the Straits times declined 0.39% and the Seoul Composite dropped 0.71%.
At the time of writing, the key European indices were up between 0.40% and 0.62% and the US stock futures were mixed with a negative bias.
Back home, foreign institutional investors were net buyers of stocks totalling Rs248.48 crore and domestic institutional investors were net sellers of equities amounting to Rs97.84 crore.
Larsen & Toubro (L&T) today said that it has received new orders of over Rs1,063 crore across various segments in October. The stock rose 0.19% to close at Rs 1,630 on the NSE.
Hexaware Technologies is scouting for acquisitions as it plans to enter into manufacturing. The acquisition could be either to strengthen the existing verticals or entering a new vertical. Hexaware has presence in three verticals--banking and capital market, travel and transportation and healthcare and insurance. The stock fell 0.89% to close at Rs111.15 on the NSE.
Advocate Mohana Nair explains the Value-Added Tax (VAT) issue for homeowners and says that developers should recover tax from customers only after the issues is finally decided by the Supreme Court. She also points out that the Bombay High Court order leaves room for a strong challenge
The three ways in which VAT payable could be determined for the period 20th June 2006 to 31st March 2010 are:
OPTION 1: As per rule 58 of the Maharashtra Value Added Tax Rules, 2005 the sale price may be determined after deducting from the agreement value, the value of land, labour, charges for planning, designing, architects fees, hire charges of machinery, etc. The tax is computed on the value arrived as above. The tax computed as above is reduced after considering the tax paid on the purchases of building material (i.e. input tax credit). The tax so determined is required to be finally paid.
OPTION 2: The rule 58 also provides for the standard deduction at 30%. The deduction towards the land value is taken from the total agreement value, the sales price is computed by further taking standard deductions (@ 30%) as provided in sub-rule 1. The tax is computed after applying the schedule rate of tax on sales price so arrived. The tax computed as above is reduced after considering the tax paid on the purchases of building material (i.e. input tax credit). The tax so determined is required to be finally paid.
OPTION 3: The Section 42(3) of the Maharashtra Value Added Tax Act provides for tax at the rate of 5% on the entire contract value. The developer may opt for this and calculate the tax liability at the rate of 5%. This tax liability is reduced by the amount of taxes paid on purchases i.e. Input Tax Credit subject to maximum of 4%. The balance tax liability so computed is to be discharged.
Max Life Partner Plus is true to the company logo “Your Partner for Life”. The product will literally tie you for a lifetime to give any returns. Max’s immediate annuity product offer rates half of what is offered by most players. Is this retirement planning or ruining your retirement?
Three years ago Suresh Sawant (name changed) purchased Max Life (formerly called Max New York Life) Partner Plus in the name of his daughter, who was 15 years old. The product was sold by friendly neighbour’s housewife, who also dabbles in Amway, the controversial multilevel company marketing highly expensive consumer products. The premium payment term is 20 years with policy term of whopping 60 years. Premium of Rs5,000 per year gave SA (sum assured) of Rs67,444. Suresh’s daughter does not need life insurance, but that’s lesser of Suresh’s worry.
When Suresh’s daughter turns 61, she will start receiving Rs5,058 per year for 15 years. What is the value of Rs5,058 per year after 45 years? It is a mere Rs104 at an inflation of 9% per annum. At age 75 years, Suresh’s daughter will get SA of Rs67,444 (again a meaningless real value of Rs383 after 60 years). The bonus declaration is prerogative of insurance company and hence Suresh and his daughter will be at complete mercy of the insurer for an extraordinary amount of time.
Based on the 6% and 10% benefit illustration allowed by the Insurance Regulatory and Development Authority (IRDA), the non-guaranteed returns may be Rs7,20,971 to Rs34,96,396. It can be lower than Rs7,20,971 as the only guarantee is Rs67,444. Assuming non-guaranteed return of 8%, the corpus at the end of 60 years will be Rs16,24,353. Adding Rs5058 paid for 15 years (61-75 age) will be Rs17,00,223.
If Suresh had put the premium of Rs5,000 in a recurring deposit (RD) renewed for 20 years (same as premium payment term) and then put the corpus in a fixed deposit (FD) renewed for 40 years, Suresh’s daughter would have got guaranteed Rs49,70,783 assuming only 8% p.a. interest rate —290% more!
Such an extreme long-term life insurance product will certainly see many surrendered policies. While we suggest that blindly surrendering may be a blunder and insurance companies make huge profits from surrendered policies (Read the cover story of the 8 March 2012 Moneylife issue ) in the case of Suresh, surrender makes sense if he (or rather his daughter) is not willing to stick for the extraordinary long-term of 60 years. It will save them from throwing good money on a wrong product. The guaranteed surrender value of traditional products is atrocious. You get only 30% of the premium paid minus first year’s premium. It surely makes for decent profits for the insurer.
At this time, Suresh is the nominee for the policy. If the policy is continued, at some point his daughter will have to nominate someone else (her future spouse or children) as almost certainly, Suresh who is in his 40s will not be around after 60 years. God knows what will be the name of Max Life after 60 years.
The policy document has a nice standard letter and signature of Analjit Singh, founder and chairman of Max India Limited. “The company agrees to pay the benefits under this policy on the happening of the insured event, while this policy is in-force”. It is surely a policy that will take lots of efforts to keep in-force.
When Max Life has set entry age of 91 days to 55 years for Partner Plus, what can we expect from Max Life‘s “Aapke Sachche Advisors”? The advertisement campaign message is that mis-selling is a thing of past. Max Life advisors are supposed to give right life insurance advice, great tips and much more. Can the advise be sachcha if the product is jhootha?
Max Life Partner Plus offers customers from age of three months to 55 years opportunity to reap benefits at age 75 years along with meagre guaranteed money-back benefits. Does a baby of three months really need life insurance and that too wait for a whopping 75 years to get endowment benefits? That’s a wait of a lifetime for something not worth waiting. In an era wherein even the insurance company partner (New York Life) has parted ways after a decade, why is the product still sold to someone who is made to wait for seven decades under the guise of retirement planning? The product slogan of “Retirement ho toh aisa” may just throw a nasty surprise on you.
The other retirement product offered by Max Life today is Immediate Annuity product. You will be astonished that Max Life’s immediate annuity rates are half of what is offered by most insurance companies. The “return of purchase price” option gives the beneficiaries the purchase price after the death of the annuitant; the purchase price is locked for the annuitant as there is no surrender option in annuity product. A gullible saver may just fall for Max Life‘s “Aapke Sachche Advisors” to have corpus locked at half the market annuity rate for a lifetime. It is high time Max Life revises its paltry annuity rates or IRDA forces Max Life to do so. It’s not just an imperfect product; its horrendous product.
Max Life Immediate Annuity product will surely give you exactly the opposite of what it claims on its website advertisement: “A powerful annuity plan to meet your post retirement financial needs, ensuring you absolute peace of mind in the golden years of your life”.