For the Nifty to reverse, it has to go below 6,025
The market settled in the positive for the second day in a row as investor sentiment received a boost following the government’s decision in allowing oil companies to hike diesel prices. From here, if the Nifty goes below 6,025, we may see a reversal of the trend. The National Stock Exchange (NSE) saw an advance decline ratio of 666:1033 and the volume of 71.20 crore shares.
Earlier, the Indian market opened in the positive on firm global cues. The Asian indices opened in the green on the back of report which showed the number of Americans filing new claims for unemployment aid hit a five-year low last week and reports of a 7.9% GDP growth in China in the December quarter.
The Sensex opened at 20,039 and soon hit its intraday high of 20,127 which was the highest opening after 7 January 2011 while Nifty opened at 6,060 and hit a high of 6,083, the highest after 6 January 2011.
While the mix of corporate result kept the indices in the positive, the trend was falling one. Hero MotoCorp, which came out with its result on Thursday after the market hours, missed estimates for the fourth straight quarter. Wipro’s performance for the third quarter was not as strong as expected while HDFC Bank came out with good results meeting the analysts’ expectations.
In the post noon session the indices hit their respective lows and closed slightly above that level. The Sensex made a higher low of 19,991 and closed at 20,039, a gain of 75 points or 0.38% while the Nifty hit a higher low of 6,048 and closed at 6,064, 25 points up, or 0.42%.
While the Sensex settled in the positive, the broader indices ended lower. The BSE Mid-cap index fell 0.23% and the BSE Small-cap index declined 0.52%).
The top sectoral gainers were BSE Oil & Gas (up 3.09%); BSE PSU (up 2.77%); BSE Power (up 1.44%); BSE Realty (up 0.86%) and BSE Capital Goods (up 0.21%). The main losers were BSE IT, BSE TECk (down 1.13% each); BSE Auto (down 0.73%); BSE Metal (down 0.61%) and BSE Consumer Durables (down 0.59%).
Sixteen of the 30 stocks on the Sensex closed in the positive. The chief gainers were ONGC (up 7.31%); NTPC (up 4.59%); Maruti Suzuki (up 3.26%); GAIL India (up 2.10%) and HDFC (up 1.56%). The key losers were Wipro (down 7.88%); Hero MotoCorp (down 2.86%); Dr Reddy’s Laboratories (down 2.60%); Hindustan Unilever (down 2.10%) and Sterlite Industries (down 2.03%).
The top two A Group gainers on the BSE were—Indian Oil Corporation (up 10.46%) and BPCL (up 9.64%).
The top two A Group losers on the BSE were—Exide Industries (down 9.36%) and Wipro (down 7.88%).
The top two B Group gainers on the BSE were—TPL Plastech (up 20% and Ranklin Solution (down 19.97%).
The top two B Group losers on the BSE were—Marg (down 11.51%) and Nutraplus Products (down 9.98%).
Out of the 50 stocks listed on the Nifty, 25 stocks settled in the positive. The major gainers were BPCL (up 10.44%); ONGC (up 7.31%); NTPC (up 4.90%); Maruti Suzuki (up 3.73%) and GAIL India (up 2.56%). Wipro (down 8.06%); Dr Reddy’s Labs (down 2.68%); Hero MotoCorp (down 2.62%); Jindal Steel & Power (down 2.34%) and HUL (down 2.11%) were the top losers on the benchmark.
Asian indices closed mostly higher on positive economic data from China. China's economy grew by 7.9% in the December 2012 quarter compared to a year earlier. The GDP growth represented an increase from 7.4% growth in the third quarter and 7.6% growth in the second quarter.
Except for KLSE Composite, all Asian indices closed in the positive. Nikkei 225 was the highest gainer, up 2.86% while the KLSE Composite declined 0.27%.
At the time of writing, the European markets were mixed with a mixed bias while the US stock futures were marginally lower.
Back home, inflows from foreign institutional investors (FIIs) on Thursday were offset by withdrawals by domestic institutional investors (DIIs). While FIIs invested Rs564.20 crore in stocks, DIIs pulled out Rs519.78 crore from the equities segment.
Venus Remedies today said it is aiming to garner around $100 million (over Rs500 crore) in the next five years from its new drug that is used for combating spread of bacterial resistance. The company, which plans to launch the drug in various countries, is introducing 'Elores' first in India. The stock rose 1.24% to close at Rs278 on the NSE.
FMCG major Colgate-Palmolive India today said company management is still in discussions to resolve issues with one of the unions at Goa facility, where work has been temporarily stopped since 6th January, following protests against suspension of a colleague. The stock gained 3.58% to close at Rs1,497.05 on the NSE.
Hindalco Industries, the metals flagship of the Aditya Birla Group, today said it has finalised arrangement for acquiring alumina refinery and bauxite mines in Brazil from its wholly-owned subsidiary Novelis as part of corporate reorganisation plan. The alumina refinery, with a capacity of 145 KTPA, situated in the city of Ouro Preto, State of Minas Gerias, Brazil, has mining rights of over 50 million tonnes of bauxite reserves. The stock gained 0.33% to close at Rs122.45 on the NSE.
The diesel hike comes at a time when the Railways is facing an acute financial crunch. Earnings from passengers and freight have failed to meet the target in the current fiscal
New Delhi: The diesel price hike has put an additional burden of around Rs2,700 crore a year on the cash- strapped Indian Railways, reports PTI quoting a senior official.
“We have to pay Rs10.80 per litre more now as the bulk price of diesel has gone up,” said the railway ministry official, adding, “The fuel bill will be about Rs2,700 crore more per year due the latest hike.”
The government had yesterday allowed state-run oil majors to fix diesel prices on their own in order to reduce an expanding subsidy bill and budget deficit. Oil companies announced a dual price mechanism while hiking the rates.
While the retail consumer will be paying 50 paisa more per litre, for bulk consumers the hike is more than Rs10 per litre.
The national transporter paid about Rs10,000 crore during the last fiscal towards its fuel bill, which has been rising every year due to increase in fuel cost.
The diesel hike comes at a time when the Railways is facing an acute financial crunch. Earnings from passengers and freight have failed to meet the target in the current fiscal.
The annual plan allocation has also been reduced from Rs60,000 crore to Rs51,000 crore this year.
As per the government’s decision, bulk consumers such as Railways and state transport corporations will have to buy diesel at market price.
Railways procure about 250 crore litre per year from oil companies for its fleet of 4,500 diesel locomotives hauling both passenger and freight trains.
Railways had recently hiked passenger fares in all classes to earn additional revenue of Rs6,600 crore in a year. The passenger fare hike will come into effect from 22nd January.
The three oil PSUs—Indian Oil, HPCL and BPCL—supply fuel providing a subsidy of 30 paisa per litre as Railways is a bulk consumer of diesel.
However, with the subsidy gone, Railways will have to buy fuel at market rate which is likely to hit hard the national transporter.
“We get 80% of our supply from IOC and rest from other two oil majors,” the official said.
Diesel price was raised by Rs5 in September last year.
Last year Railways had effected a 20% hike in freight rates.
However, it seems unlikely that Railways would consider another freight hike despite its rising fuel cost.
“We do not want the Railways to be outpriced in the market because of higher freight rate and we have to be competitive,” railway minister Pawan Kumar Bansal had earlier said.
Currently the Railways' share in the freight market is 36% only while in the US it is 48%. The national transporter wants to attract a higher percentage of freight transportation by offering competitive rates as compared to road transporters.
If No-Claim-Bonus (NCB) is wrongly claimed, your claim will be rejected and your policy cancelled. The agent is contractually not liable to you. Don’t fall into the agent’s trap of a false NCB lure. The company will wake up at the time of claim and uncover your wrongdoings
Amit Kumar (name changed) had played with the tune of an HDFC ERGO agent to secure 20% No-Claim-Bonus (NCB) even when he had one claim in each of previous two years when his car was insured by Royal Sundaram. In the fourth year, he went back to Royal Sundaram and was given 25% NCB. Only when Mr Kumar filed a claim, Royal Sundaram uncovered that the policyholder should not have got 20% NCB from HDFC ERGO and hence the policy currently underwritten by Royal Sundaram is not in good faith due to misrepresentation by Mr Kumar.
Brokers have more responsibility than agents in case of mis-selling. According to Avadhoot Mavlankar, principal officer, Shinrai Insurance Broking Services, “We take the renewal notice from the client, but we also insist on a NCB confirmation letter duly signed by the client, especially from unknown clients. This is because the renewal notice is generated one to two months before the policy expiry. A claim can occur after renewal notice issuance and prior to the expiry of the policy.”
He added, “An agent represents the insurance company, so contractually the agent is not liable to the insured. In my opinion, this is purely Mr Kumar’s fault. Insurance contracts are contracts of utmost good faith. Let alone the good faith, Mr Kumar has purposely declared wrong NCB entitlement. So his case is weak.”
Sure, Mr Kumar is at fault by blindly agreeing to HDFC ERGO’s agent, but how did Royal Sundaram not know that Mr Kumar was their customer for two previous years with the same car and had made a claim in each year? In era of computerisation, it is almost certain that the insurance company knows or should know more at time of underwriting. Once the claim is filed, the insurance company goes in overdrive mode to scrutinize your NCB and it is indeed a perfect trap to proclaim that policyholder erred with NCB while buying the policy and hence no claim is payable.
When contacted by Moneylife, Royal Sundaram claims that HDFC ERGO had unearthed the fake 20% NCB and hence reduced policy term from 12 to 10 months. Interestingly, Royal Sundaram is unwilling to give that in writing to the policyholder. The only reason given for claims rejection is that the customer misrepresented the facts while buying policy with Royal Sundaram.
HDFC ERGO has maintained stoic silence when asked by Moneylife. If Royal Sundaram is true about its assertion, did HDFC ERGO take any action against its own agent who lured Mr Kumar to go for 20% NCB even though the agent was told by the customer that he has one claim in each of the previous years? The agent claims that he does not remember as he had sold the policy more than one year ago. How true, considering that it may be routine for this agent to bait a prospect with NCB manipulation!
According to Mr Kumar, “I tried to check with HDFC ERGO executives if they had intimated to me about the shortfall in the policy. They are saying that they are unable to retrieve the details and that they would have informed me by phone or letter. I am sure that I have not received any letter or phone or mail from them about the shortfall. I have not changed my address.”
Avahoot Mavlankar, says, “In normal course HDFC ERGO (new insurer) would confirm the NCB entitlement from the old insurer (Royal Sundaram), till this time the policy is already issued with NCB declared by the client. Now, HDFC ERGO would have got the reply from Royal Sundaram that client has made a claim and hence there is no NCB entitlement. So, there is NCB recovery amount due from the client. In normal course, HDFC ERGO would have sent the notice for the same on the policy address (which may be different from communication address). The insurer might not have received any reply from the client within the stipulated period, so the only option available to it is short binding of the policy i.e. adjust the recovery amount by curtailing the period of insurance. HDFC ERGO must have also issued endorsement to that effect.”
After the claims rejection by Royal Sundaram due to misrepresentation, the insurance policy is technically no longer valid. Mr Kumar did not get any response from the company about the status of the policy. He was kept in a limbo for few days until Royal Sundaram agreed with Moneylife that the issue needs to be closed to ensure that Mr Kumar is covered going forward.
Royal Sundaram agreed that they will make a decision on underwriting fresh policy or recover the NCB amount to continue with existing policy. If not, then Mr Kumar will not have any cover during the interim, which can be huge liability for him considering that he has been having accident almost every year! Mr Kumar, if your car driving is so bad, how dare you to go for NCB considering that you are financially well-to-do working in the IT field?
On 18 January 2013, Mr Kumar received email response from Royal Sundaram that the OD (Own Damage) portion of the policy stands cancelled with effect from 15 January 2013. Looks like the insurance company decided to cut-off business from Mr Kumar.